Growth in Southeast Asian economies including Malaysia and Thailand could have peaked in the last quarter as the European debt crisis and Thai floods hurt the outlook for exports, adding pressure on policymakers to cut interest rates.
Malaysia’s GDP increased 4.8 percent in the three months through September from a year earlier, after a 4 percent expansion the previous quarter, according to the median of 25 estimates in a Bloomberg News survey.
Thailand’s growth probably quickened to 4.5 percent from 2.6 percent, according to a survey of 11 economists.
“Exports will likely soften in the coming months as Europe slides into a recession,” said Chua Hak Bin, a Singapore-based economist at Bank of America Merrill Lynch. “Both Bank Negara Malaysia and Bank of Thailand will keep their options open and ease if growth readings turn ugly in coming months.”
Authorities in Singapore and Indonesia have cut growth forecasts in recent weeks and the Asian Development Bank said economies in the region could expand at a slower pace than earlier estimated.
Most Asian currencies fell over the past three months on concerns the nations that led the recovery from the 2009 global recession could falter, and United Overseas Bank Ltd said policymakers might allow more weakening to support exports.
“It’s part of monetary easing if they let their currencies weaken,” said Ho Woei Chen, an economist at United Overseas Bank in Singapore who expects Malaysia and Thailand to highlight the risks to growth going forward. “Probably they are not cutting interest rates that aggressively, but letting their currency depreciate.”
The ringgit has fallen more than 5 percent over the past three months and the baht has weakened 3.3 percent. Neither have cut rates even as Indonesia and Australia lowered borrowing costs this quarter.
Singapore, which uses the Singaporean dollar as its main tool to manage inflation, said last month it would reduce the pace at which the currency strengthens. The nation’s exports fell the most in more than two years last month as electronics shipments by companies such as contract manufacturer Venture Corp dropped 31.2 percent, a report showed on Thursday.
Revised third-quarter GDP data expected on Monday could show Singapore’s economy grew faster than the government estimated earlier, a Bloomberg survey showed.
Exports and domestic demand probably helped Thailand and Malaysia expand faster last quarter, before the deepening European sovereign-debt crisis and the worst Thai floods in almost 70 years threatened global growth and regional trade.
“Strong domestic demand continued to drive growth” in Malaysia, said Daniel Wilson, an analyst at Australia & New Zealand Banking Group Ltd in Singapore. “Looking ahead, one of the major risks to growth is a slowdown in the external sector spilling over into the domestic economy. Supply chain disruptions stemming from Thai floods may depress industrial production in the short run.”
“Most of the emerging economies like ours are still experiencing growth even though we may experience a moderation in growth because of the challenging global environment,” Bank Negara Malaysia Governor Zeti Akhtar Aziz said last week.
Thai Prime Minister Yingluck Shinawatra is struggling to rescue the nation from floods that have claimed at least 567 lives, swamped thousands of factories and threatened the homes of 20 percent of the country’s 67 million people since late July.
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