Against the backdrop of subdued global demand, the growth prospects of ASEAN's major export-orientated economies -- Singapore, Malaysia and Thailand -- will remain weaker than those of more domestic demand-driven economies, Indonesia and the Philippines, in 2016 and 2017, according to Moody's Investors Service.
"Singapore, Malaysia and Thailand are susceptible to a prolonged period of subdued global demand via both the export channel and weaker investment demand," says Rahul Ghosh, a Moody's Vice President and Senior Research Analyst.
Ghosh was speaking on Moody's just-released edition of Inside ASEAN, which also examines the implementation of major policy reforms in Malaysia, which have mitigated the negative impact of lower oil prices on the government's fiscal position.
"We forecast G20 GDP growth at 2.6% in 2016, similar to last year and rising to only 2.9% in 2017. And downside risks to global growth are increasing," adds Ghosh.
Vietnam (B1 stable), meanwhile, will remain a regional growth outperformer on the back of robust manufacturing activity and strong foreign direct investment flows.
Export growth is slumping across the region; however, the overall economic impact will vary based on the relative importance of trade to GDP.
According to Moody's, total trade -- the sum of exports and imports -- accounts for 346%, 131% and 130% of GDP in Singapore (Aaa stable), Malaysia (A3 stable) and Thailand (Baa1 stable), respectively, which is much higher than the 41% recorded for Indonesia (Baa3 stable) and 58% for the Philippines (Baa2 stable).
Moody's notes that external pressures -- including increased capital flow volatility and consequent exchange rate depreciation -- have led to a deterioration in Malaysia's growth and external metrics thereby supporting Moody's earlier decision to revise the sovereign rating outlook to stable from positive.