Weaker trade and investment weigh on GDP growth, despite stable private and public consumption.
Leading Moody’s to make downward changes to full-year GDP forecasts for 2019-2020.
Moody’s Investors Service has — in a newly released report — revised downwards its GDP growth forecast for 16 economies in Asia Pacific.
Of the 16, Hong Kong and Singapore have shown particularly weak expansions this year, with very large deteriorations in real GDP growth when compared to the first half of 2018.
Moody’s explains that externally-oriented economies saw a sharper slowing during the first six months of 2019, while domestic factors have had a greater influence on growth in Japan, India and the Philippines.
Moody’s also points out that the weaker global economy has stunted Asian exports and the uncertain operating environment has weighed on investment. In particular, softer capital formation has mirrored the weakening in exports, especially for trade-reliant economies such as Korea and Hong Kong.
As for the Philippines, the delay in the passing of the government budget has disrupted its infrastructure build-out, while in Malaysia and Sri Lanka, fiscal tightening has posed drags. And with India, the moderation in business sentiment and slow flow of credit to corporates have contributed to weaker investment in the country.
Moody’s also says that the slower overall GDP growth in the region has not yet weighed significantly on broader employment conditions, while generally benign inflation supports purchasing power across Asia Pacific.
Moody’s report covers the economies of Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Mongolia, New Zealand, the Philippines, Singapore, Sri Lanka, Taiwan, Thailand, and Vietnam.