With the recovery of the US economy looking further and further away, economists say the prospects for export-driven Southeast Asian economies have dimmed in tandem.
The US, a top export destination for the region, has been an anchor of growth for Asian countries, especially those dependent on electronics exports such as Singapore, Malaysia and the Philippines.
But the US economy grew just 0.7 percent in the second quarter, its weakest showing in eight years, and until the US picks up, the picture for the region is not going to look pretty, economists say.
"The key thing is, when is the US economy expected to bottom out," said Gerard Teo, a regional strategist at Dutch bank ABN Amro.
"The general feeling is that with interest rate cuts [by the Federal Reserve] and tax rebates, this should bottom out by the end of the year but one has to be slightly less optimistic at this point," he said. "It doesn't appear that we have hit bottom yet."
Rebecca Patterson, a currency strategist at JP Morgan Chase and Co sees more dark clouds.
"The hopes that the US would bottom out in the third quarter are called into question now," she said. "Our expectations are that we will have some disappointing news on the US front for the third quarter."
This will not augur well for Southeast Asia because new orders from the US for electronics goods will not come streaming in while existing inventories remained uncleared.
"In a nutshell, the outlook remains extremely bleak," Desmond Supple, head of research at Barclays Capital, said. "We see no signs of the overhang of the US electronic sector being worked out anytime soon."
In its latest quarterly economic review, SG Securities has revised downwards its 2001 growth forecast for Southeast Asian countries.
It projected Indonesia would grow 2.9 percent this year from a previous forecast of 4 percent, Malaysia at 0.7 percent from 6.2 percent, the Philippines at 2.1 percent from three percent, Singapore at 1.3 percent from 6.7 percent, and Thailand at 2 percent from 3.7 percent.
Unfortunately for the region, there was little governments could do to reverse the bleak situation apart from the usual fiscal pump priming measures, economists say.
"Fiscal priming has a limit because they are struggling with restructuring," said Teo at ABN Amro.
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