KUALA LUMPUR: Growth projections for countries in the ASEAN region remain robust, with the International Monetary Fund (IMF) forecasting a growth rate of 4.6 percent in 2024, supported by strong domestic demand and exports.
According to BERNAMA News Agency, the IMF’s latest report, “Outlook for Asia and the Pacific: Resilient Growth but Higher Risks,” highlights that Indonesia, the Philippines, and Vietnam are expected to experience robust growth of over five percent, while Thailand’s growth is anticipated to be more subdued at 2.8 percent in 2024 and 3.0 percent in 2025. The IMF has also revised Malaysia’s GDP growth forecast for 2024 upward to 4.8 percent from its previous estimate of 4.4 percent in April, maintaining a 4.4 percent projection for 2025.
Despite ongoing trade tensions between China and the United States, ASEAN countries have continued to enhance trade and investment ties with both nations, capturing export opportunities created by tariffs. The IMF forecasts that growth in Asia will slow to
4.6 percent in 2024 and further to 4.4 percent in 2025, down from 5.0 percent last year, due to diminishing support from pandemic recovery and factors like an aging population.
The IMF report notes that regional growth prospects for 2024 have been revised upward by 0.1 percentage point, reflecting strong performance earlier in the year. The Asia and Pacific region is expected to contribute approximately 60 percent to global growth in 2024, with strength concentrated in emerging market economies. However, growth in advanced economies is expected to remain sluggish due to less robust private consumption and temporary production disruptions in Japan in early 2024.
For 2025, regional growth projections have also been increased by 0.1 percentage point to 4.4 percent, as looser global and domestic monetary conditions are expected to boost private demand. However, the IMF warns that the outlook is subject to significant economic and geopolitical uncertainties.
The IMF projects that inflation in advanced Asia, exc
luding Japan, will continue to decrease, with an average rate of 2.5 percent expected in 2024, further receding to 2.3 percent in 2025. Emerging Asia is forecast to experience its lowest inflation rate in nearly 25 years at 2.1 percent in 2024, with a slight recovery to 2.7 percent in 2025 due to normalizing rates in China and Thailand.
The IMF acknowledges that despite robust growth in early 2024, the risk landscape has worsened since April due to escalating geopolitical tensions, China’s property market correction, and potential financial market turbulence. Risks are now tilted to the downside, with external demand potentially weaker than forecast if global monetary tightening impacts more strongly than anticipated.
In terms of monetary and exchange rate policy, the IMF notes that most Asian central banks maintained policy rates in early 2024, constrained by concerns over currency depreciation if rates were cut before the US Federal Reserve. However, the Fed’s recent easing cycle has provided more flexibi
lity for Asian central banks to adjust policies to domestic needs.
IMF research indicates that over the past three decades, Asian capital markets have deepened, balance sheet dollarization has decreased, and foreign reserves coverage has improved, increasing the flexibility of Asian central banks to focus on domestic conditions and allow exchange rates to adjust accordingly. Financial regulators and supervisors are advised to monitor risks closely and use macroprudential tools to address vulnerabilities, particularly in real estate markets and high-risk credit segments, to prevent systemic risks.
