The Asean + 3 Macroeconomic Review Office (AMRO) is expecting countries in the Asean + 3 region to grow by 4.9% this year, a slight edge down from the 5.9% it had previously predicted in October 2021.
For 2021, AMRO is looking at a flat growth rate.
The downgrade for 2022 follows the spread of the “highly transmissible” Omicron variant which has seemingly necessitated the reimposition of containment measures including a retightening of border controls.
The need for booster doses is also going to weigh heavily in the economic recovery of Asean + 3 nations, AMRO writes in a Jan 25 report.
“These factors, in addition to the continued spread of the Delta variant, account for the downward adjustment to the growth forecasts for Indonesia, Malaysia, Philippines, Cambodia, Laos and Thailand,” the report elaborates.
Nonetheless, Khor Hoe Ee, chief economist at AMRO notes that the Asean + 3 countries are likely to remain resilient in 2022, amid “sufficient policy space to navigate through these challenges”.
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“A resurgence of infections continues to be the key downside risk, amplified by lingering global supply chain disruptions and rising global pressures,” adds Khor.
Another pressing challenge facing the region and world at last is inflation.
The Consumer Price Index (CPI) is slated to come in at 2.9% in 2021, up from 2.2% next year.
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AMRO expects Asean + 3 nations to see a y-o-y rise in the price gauge by 2.6% in 2021 and 3.4% in 2022.
This comes amid higher cost pressures for food, energy and raw materials amid the global increase in prices.
“While the rise in global inflation is likely to prompt major advanced economies to roll back extraordinary monetary support earlier or more sharply than anticipated, the spill over effects for the region is likely to be limited because of greater resilience,” notes AMRO’s Khor.
Cover image: Bloomberg
