TOKYO -- The economies of Indonesia and the Philippines are set to grow faster this year thanks to the strengthening U.S. economy, falling crude oil prices and other factors, according to Japan Center for Economic Research projections. China, meanwhile, will continue slowing down, though the center expects the country to muster 7% growth in 2015.
In its first short-term economic forecast report for Asia, the JCER charts the real gross domestic product growth rates of five Asian economies -- China, Indonesia, Thailand, Malaysia and the Philippines -- in 2015 and beyond. The center intends to release two such reports annually.
The plunge in crude oil prices has been a tailwind for Asian economies. The report shows that cheaper fuel will likely boost the analyzed countries with the exception of Malaysia, a net oil exporter. In addition, since the U.S. is one of these nations' main export destinations, the improving economy there will benefit them.
Indonesia's economy is forecast to grow 5.7% this year, the first rise in its growth rate in four years, according to the JCER. This is partly thanks to Indonesian President Joko Widodo's decision to end gasoline subsidies in January.
For years, the fuel subsidies had been squeezing the Indonesian government's coffers. It was feared that a hike in gas prices would cool consumption, but cheaper crude oil has cushioned the impact. This will allow the government to channel funds from the subsidy cut into economic stimulus policies, such as social infrastructure development.
The Philippine economy is projected to grow 6.2% in 2015. The drop in oil prices will help improve the country's trade account balance. Moreover, remittances from Filipinos working overseas, which account for roughly 10% of the country's GDP, are likely to sustain robust domestic demand.
In Thailand, the economy is estimated to have grown less than 1% in 2014, due in large part to the military coup last year and the ongoing political uncertainty. However, its economy will likely expand 3.9% this year on the back of a recovery in exports and consumption.
In contrast, the JCER predicts that the Chinese and Malaysian economies will decelerate this year. In China, the property market has been cooling and the government intends to shift to a gradual, stable growth path.
Taking into account falling oil prices and the effects of monetary easing by the Chinese authorities, the JCER estimates China's growth rate at 7% in 2015.
In 2016, the center predicts that crude oil prices will bounce back to over $70 per barrel. As a result, Malaysia's economy is forecast to grow 5% next year; China's growth is projected to slow to 6.7%.
Differences in economic sentiment between nations could create complications.
Members of the Association of Southeast Asian Nations are set to create a unified market, the ASEAN Economic Community, by the end of this year. But Yuki Masujima, principal economist at the JCER, said the varied outlooks "could make it difficult to coordinate policies in the region."