■ 3Q GDP has come in roughly in line with consensus across ASEAN, but growth is slowing in most places
■ Commodity prices have yet to show signs of recovery, but disruptions from El Nino may still be felt in coming months
■ In this edition of ASEAN Perspectives, we look at unemployment trends across the region, consider how much worse they could get and the implications, see page 3 for more
We have received 3Q GDP data for all 6 ASEAN economies in our coverage universe. Singapore unexpectedly averted a technical recession with an expansion of 1.9% q-o-q saar (and the same in y-o-y terms), but this was accompanied by lower official 2015 growth and trade forecasts. And while Thailand’s 2.9% y-o-y print exceeded expectations, domestic demand was clearly weak, with goods imports contracting more than expected. Growth in Malaysia decelerated for a third quarter to 4.7% y-o-y, propped up by an unclear construction-related surge in investment. Conversely, things might be stabilizing for Indonesia. Despite an identical growth print, consumption, and in particular investment both surprised to the upside. At the brighter end of the spectrum, the Philippines and Vietnam reported robust expansions of 6.0% and 6.5% respectively.
This year’s El Niño has proven to be one of the strongest in the past 50 years. Drought conditions have persisted in most of Indonesia and the Philippines for several months now. Fortunately, the impact on food prices has yet to become a serious issue. Authorities have ramped up rice imports in both countries, which should keep prices of this most important commodity at bay (even if it stymies government self-sufficiency plans). Moreover, energy prices have failed to pick up materially this year and broad global disinflation is still the name of the game.
We forecast CPI within or below the targets/estimates for every country in the region in 2015. This allows central banks to keep policy accommodative, or even ease further when and where conditions allow. We expect a cut by the BoT in Thailand next month and one cut by Bank Indonesia in 1Q once the dust from a potential December Fed hike settles. The bar to easing by the MAS in Singapore is lower than in the past, but we would need to see weak sequential growth through 1Q16. We see BNM in Malaysia on hold for the time being, while the BSP in the Philippines is planning operational changes in 2Q16, but any rate moves should not be seen as a change in policy stance. (Read Report)
Source : HSBC Global Research