ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintSite TitleTitle ChevronIcon Twitter
Economy

Southeast Asian economies turn sluggish as exports sag

A Bangkok mall with scarce shopper traffic. A slowdown in exports in Southeast Asia is affecting domestic consumption as well.

SINGAPORE -- Southeast Asia is showing an economic slowdown with lackluster gross domestic product data from the January-March quarter linked to a decline in exports.

     The Philippines posted its slowest expansion in three years Thursday, with real growth of just 5.2% on the year. Real GDP edged up just 0.3% on the quarter, compared with 2.5% growth in the October-December period.

     The news sent a shock wave across the country. Economic Planning Secretary Arsenio Balisacan was interrupted by a cell phone call during a news conference Thursday -- it was from President Benigno Aquino III, apparently demanding an explanation. Philippine stocks fell 1.2% the same day.

     A drop in government spending played a role, as delays in road and other construction projects led to a roughly 25% decrease in public works expenditures.

     A mere 1% increase in exports was another factor. Remittances from Filipinos working abroad, which account for 10% of GDP, rose just 0.5% in January, the lowest level in six years.

     The quarter also proved sluggish for other countries. Indonesia, the region's biggest economy, saw its GDP shrink 0.18% from the October-December period, down for a second straight quarter. And Thailand, Malaysia and Singapore saw smaller growth than in the previous quarter.

     These five economies account for nearly 90% of the nominal GDP for the 10 members of the Association of Southeast Asian Nations, according to the International Monetary Fund.

     Export slowdowns are the biggest barrier to growth. Indonesia's January-March exports fell 0.5% on the year, down for two consecutive quarters. Thailand's shrank 4.5%. Decreases in coal, natural rubber and other shipments due to weaker demand in China took a toll.

     With many economies in the region dependent on foreign demand, this has led to a wide slowdown in production. In April, Singapore's manufacturing output contracted 8.7% on the year.

     Slowed exports are hurting consumption as well.

     In Malaysia, the index for consumer sentiment has fallen to the lowest in six years. Though January-March private-sector consumption increased 8.8% on the quarter, steeper than in the October-December period, this was due largely to last-minute demand before the April goods and services tax hike.

     Worsening of Indonesia's current-account balance linked to the export slowdown has softened the rupiah, raising import costs. With consumers' purchasing power weakening, new-auto sales for the January-April period dropped 16% on the year.

     In Thailand, mounting household debts are weighing down consumption, after tax breaks under the previous government spurred car and home purchases. 

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends July 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media