Moody's Analytics: Outlook For APAC Economy Next Year Is Good

KUALA LUMPUR, Aug 22 (Bernama) -- The outlook for the Asia Pacific (APAC) economy in 2025 remains positive, despite anticipated slowdowns in economic growth in China and India over the next year, Moody’s Analytics said.

In a note today, the firm projected an improvement in Japan's economy following its near-recession from mid-2023 to early 2024. The June quarter of 2024 showed a rebound in consumer and investment spending, reversing previous downward trends.

“Many uncertainties remain regarding the pace of real wage growth as well as tightening monetary policy, but 2025 should be better than this year,” it said.

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According to the firm, growth will accelerate in Southeast Asia, supported by trade, investment, consumption, generally stimulatory fiscal policy, and, by early next year, easing monetary policy.

“Vietnam will benefit the most from rising global demand for goods and will see a steady acceleration in gross domestic product (GDP) growth to 6.5 per cent next year from 5.0 per cent last year. Malaysia and Thailand will follow suit, but at a slower pace. Singapore will be steadier but at the slower pace of a more developed economy.

“The Philippines and Indonesia will not lag far behind Vietnam, but their economies are not as closely tied to the global economy. An aggressive push by both countries to improve their infrastructure will support high rates of growth,” it said.

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However, the report noted risks, particularly for the Philippines, which must adhere to its plans and execute effectively. Meanwhile, uncertainty looms over Indonesia until Prabowo Subianto assumes the presidency in October.

Moody’s Analytics said that investment spending is keeping the APAC economy afloat, with fiscal policy in India and China, particularly China’s support of bank lending to manufacturers, reinforces growth in these behemoth economies.

“Southeast Asia, particularly Malaysia and Vietnam, is benefiting from increased investment flows from both local and international sources. While the Philippines' fiscal policy has strongly focused on infrastructure development, execution has been uneven over the past year.

“Thailand’s struggles to form a stable government coalition have hampered fiscal action and deterred foreign investment. Meanwhile, Taiwan's weak investment cycle is expected to improve now that its election is over,” it added.

-- BERNAMA