Improved Economic Perspectives in ASEAN Will Benefit Tourism

ASEAN, economics, GDP, data

Rosy forecasts for the economy in Southeast Asia in 2018 will have a beneficial effect on intra-tourism in the region. GDP growth in Q2 of 2018 confirmed the uptrend for the entire region…

Forecasts released by Focus Economics, an online think-tank of leading world economists highlighted that  ASEAN’s economy continues to perform well in the second quarter with growth forecast to come in at 5.2% on a year to year basis. There has been signs of acceleration economic growth in Indonesia, the Philippines, Thailand and Singapore.

According to Focus Economics, the latest GDP readings for the first quarter confirmed regional growth at 5.4%. with visible improvement in economic performances of many countries.

  • Philippines/Vietnam/Thailand

The Philippines economic performance is among the strongest in the region thanks to an expanding service sector and strong public investments in infrastructure. GDP is expected to grow by 6.7% this year. GDP per capita is likely to pass US$3,000 for the first time.

The Vietnamese economy is tracking the Philippines with a GDP growth expected to reach this year 6.6%. Focus Economics panel of specialists put the GDP good performance to strong export but also to private consumption stimulated by rising household incomes and a swift expansion in private credit.

Thailand which experienced over the last three years, a slower economic growth than its other ASEAN partners, saw GDP growing by 4.8% year-on-year in Q1, marking a five-year high. For the year, panelists of Focus Economics see Thailand GDP up by 4.2% at least.

  • Malaysia/Indonesia

In Malaysia, uncertainties over fiscal revenues will lead to a slowdown in infrastructure investments as the new government is cancelling many large projects such as the High Speed Train link to Singapore or the East Coast Rail Line. The recent abolition of GST will however stimulate for a while private consumption. Focus Economics put Malaysia GDP growth at 5.4% for 2018.

Indonesia is doing better due to a general better outlook for Indonesian commodities and improved domestic consumers’ confidence. As a sign of consumers’ confidence, retail sales growth accelerated to a ten-month high in April and should still remain high. Investments in public infrastructure continue to gain strength which will lift Indonesia GDP growth outlook. Focus Economics experts believe the GDP will be this year up by 5.3%, 0.2 point more than last year.

  • Myanmar/Cambodia/Laos

Emerging economies of ASEAN should perform best. Myanmar is due  to remain the fastest-growing economy in the region, with a 7.1% increase expected in 2018, up from 6.7% last year. Robust private and public consumption growth should drive the economy of the country. Cambodia is forecast to see its GDP expanding this year by 6.9% due to excellent tourism performance. Laos GDP should also expand by 6.8% this year due to increased demand in commodities (copper) and increased revenues from expanding hydroelectricity generation.

  • Singapore/Brunei

Although Singapore GDP growth is slower than its counterparts in ASEAN, the performance of the city-state is impressive as it can be considered a mature economy. Focus Economics put GDP growth by year end at 3.2%. Positive factors are a stronger expansion in the services sector than initially thought, higher wages and a recovery in the housing market.

Only Brunei GDP perspectives remain mediocre this year despite the fact that the economy is likely benefiting from oil prices at multi-year highs. Focus Economics panelists estimate GDP growth at 1.4% this year which is however a turn-around of previous years when Brunei GDP contracted on average by 2% between 2013 and 2017 due to low prices for gas and oil.

Although uncertainties remain now over the evolution of a US/China trade war -which would definitely affect ASEAN economies as they are key trade partners to both countries, this would have little effect in 2018, especially for private consumption.

Tourism in the region will then definitely benefit from the stellar performances of regional economies with ASEAN citizens travelling more than ever until year end…