Southeast Asia growth rate to decelerate to 3.8%

Southeast Asia’s growth rate is expected to decelerate to 3.8 per cent in 2023 due to the sluggish growth of global trade and the effects of tightened domestic monetary policy, according to the UN Conference on Trade and Development (UNCTAD) Trade and Development Report 2022.

“The region’s vulnerability to financial and exchange rate instability weighs on policymakers’ minds,” the report pointed out.

The region registered a relatively anaemic growth of 3.8 per cent in 2021, far below the rate of expansion observed in recent years, UNCATD said.

However, the economic performance of Southeast Asian countries has so far been stronger, albeit uneven, it noted. It expects the region to grow by 4.1 per cent in 2022. However, growing inflationary pressures and a subsequent tightening of domestic monetary stances, along with more costly international financing conditions, will dampen activity, the report cautioned.

UNCTAD expects the Indonesian economy to grow 4.3 per cent in 2022, after having registered a relatively weak recovery in 2021. “The stronger growth performance in 2022 is largely a result of the lifting of Covid restrictions, favourable conditions for the export sector and the accommodative stance of the Central Bank. Yet the pronounced increase in domestic food and energy prices was met by the introduction of a temporary ban on the export of palm oil and increases in energy subsidies,” it said.

For 2023, UNCTAD estimates 4.4 per cent growth, as the positive impact of continued high prices for Indonesia’s commodity