Malaysia leads South-east Asia GDP downgrades amid Delta's grip; Spore only country to buck trend

HONG KONG (BLOOMBERG) – Malaysia leads growth downgrades by economists across South-east Asia as the Delta variant forces countries to reimpose pandemic restrictions.

Malaysia’s growth outlook for this year was downgraded the most, a swing of 1.4 percentage points to a 4.3 per cent expansion, according to the latest economist survey results compiled by Bloomberg. Thailand, downgraded to 1.2 per cent from 2.4 per cent in May’s survey, is still expected to post the slowest growth.

Singapore is the only country in the region to buck the downgrade trend, now forecast to grow 6.5 per cent compared to a previous estimate of 6.3 per cent.

The rapid spread of the highly infectious Delta variant and low vaccinate rates have caught much of South-east Asia off guard. The region registered robust economic recovery in the second quarter, but it was flattered by comparisons with last year’s crash.

The region is now suffering a sharp downward movement in private consumption and investment due to suppression measures, as well as inadequate fiscal and monetary support, said Trinh Nguyen, senior economist at Natixis in Hong Kong.

For the current quarter, forecasts for Malaysia’s GDP growth were slashed by the most in the region, by 2.8 percentage points from May’s survey. Thailand was second-worst, cut by more than 2 percentage points in both the third and fourth quarters.

The Asian Development Bank last month downgraded its South-east Asian growth forecast in its outlook supplement to 4 per cent from 4.4 per cent.

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