The Department of Statistics Malaysia (DoSM) said the country’s economic growth rate reached 8.7% in 2022, a record high over 22 years, higher than the forecast and up sharply from 3.1% in 2021.
The Central Bank of Malaysia (BNM) assessed that the economic recovery is thanks to economic stimulus measures and increasing domestic demand. The labour market improvement has contributed to the continuous growth of private consumption. Bank Islam Malaysia Berhad forecast that the Malaysian economy will grow by 4.5% in 2023, while other banks said that the rate will hover around 4-4.4%.
In Thailand, the tourism sector - an important pillar of the economy has prospered again, especially after China reopened its economy. Data released by the Thai Chamber of Commerce on February 9, showed that Thailand’s consumer confidence index was 51.7 in January, the eighth consecutive month of increase and the highest level over the past 26 months.
Thailand’s economic growth is forecast to reach 3.5-4% this year, thanks to tourism and a general election scheduled to take place in the second quarter of 2023. Analysts said that the general election will help create 50 billion baht in spending, contributing to raising economic growth by 0.3%, while tourists from China may account for 7-8 million of the total 26-27 million international arrivals to Thailand this year.
Indonesia, the largest economy in Southeast Asia, has also recorded positive recovery signals, especially in the investment sector. According to the Indonesian statistics agency, the country’s economy grew by 5.31% in 2022, the highest rate since 2013. The investment sector is now seen as a bright spot in the overall economic picture of the country.
The Indonesian Ministry of Investment has just announced that foreign direct investment (FDI) disbursement reached 45.6 billion USD in 2022, the highest level in history. Indonesia recorded the world’s highest FDI growth last year, thanks to political stability and supportive government policies under President Joko Widodo.
Signals of economic recovery have also been recorded in other Southeast Asian countries such as Vietnam, the Philippines, and Cambodia. However, analysts say that regional economies' challenges this year remain very large. Inflation will remain a threat not to be underestimated, especially in the Philippines, Thailand and Laos.
The Philippine Statistics Authority (PSA) released data showing that inflation in the country hit 8.7% in January 2023, the highest level since November 2008. In Laos, the country’s Statistics Bureau said the inflation rate over the same period last year increased to 40.3% in January 2023, up 1.03% compared to December 2022. Laos has had the highest inflation rate recorded in the past 23 years.
Meanwhile, the Thai Ministry of Commerce has just announced that the country’s headline inflation in January increased by 5.02%, compared to the same period last year.
Besides the risk of inflation, the manufacturing sector in some Southeast Asian economies is still quite weak, notably Singapore. Data from Singapore’s Economic Development Board (EDB) showed industrial production in December 2022 fell 3.1% year-on-year, following an upwardly revised 3.8% decrease in the previous month.
In addition, the “headwinds” from the unfavourable international context such as the Russia-Ukraine conflict, the tension in China-US relations, and the risk of a world economic recession, may also hinder the growth of Southeast Asian economies. Therefore, fighting inflation, stimulating growth and stabilising the macro-economy, will remain the focus for Southeast Asian economies in 2023.
