strong start to the year, growth across Southeast Asia has cooled in response to prolonged weakness in demand in Europe and the United States, and a slowdown in China. Still, regional economies have remained relatively more resilient than most developed countries and continue to attract solid foreign investment.
Annual growth in Indonesia in the third quarter, year-on-year, as exports slowed, but it was still 6.2 per cent. In April-June, growth was 6.4 per cent.
For Thailand, the NESDB revised its forecast for 2012 economic growth to 5.5 per cent, compared with its previous 5.5-6.0 per cent range. Due to the floods, growth in 2011 was only 0.1 per cent.
More easing ahead?
In a bid to spur flagging growth, Thailand's central bank's monetary policy committee (MPC) cut the benchmark interest rate by a quarter of a point to 2.75 per cent on October 17. At the same time, the central bank cut its GDP growth forecast for next year to 4.6 per cent from 5 per cent.
While most economists expect no change in the policy rate next week, some still think a cut is possible.
We believe that moderating growth momentum and expectations of manageable inflation will keep the bias of the majority of MPC members to support business sentiment, said economist Rahul Bajoria of Barclays Capital. We continue to expect the BOT to cut rates by another 25 bps in the next policy meeting, despite a likely acceleration in inflation in 2013.
The central bank appeared to have played down inflation risks, forecasting headline inflation of 3.0 per cent for 2012 and down to 2.8 per cent for 2013.
The NESDB forecast 2012 headline inflation of 3.0 per cent for 2012 and 2.5-3.5 per cent for next year.
The Thai agency forecast GDP growth of 4.5-5.5 per cent for 2013. Economists polled by Reuters have predicted growth of 5.3 percent in 2012 and 4.5 percent for 2013..
The NESDB cut its export growth forecast to 5.5 per cent from 7.3 per cent for this year, but forecast export growth of 12.2 per cent for 2013.