The World Bank has released its latest economic update for East Asia and the Pacific, revealing that Cambodia and the Philippines are expected to be the fastest-growing developing economies in Southeast Asia this year. The bank revised its GDP growth forecast for Cambodia from 5.5 percent to 5.8 percent, and for the Philippines from 5.6 percent to 5.8 percent.
The positive revision reflects the resilience and potential of these two nations. Additionally, Vietnam’s growth forecast was upgraded from 4.7 percent to 5.5 percent, securing its position as the third-fastest growing economy among ASEAN’s developing members.
However, the bank revised downwards its forecasts for China from 5.1 percent to 4.5 percent, and for Indonesia from 5.0 percent to 4.9 percent. This highlights the contrasting economic performance within the region.
The bank also provided insights into the uneven recovery across the region. While output per capita has surpassed pre-COVID levels in most larger East Asia and Pacific developing economies, the recovery has been uneven. China and Vietnam already exceeded pre-pandemic levels in 2020, and by the end of 2022, Cambodia, Indonesia, Laos, and Malaysia are expected to join them. The Philippines and Thailand are projected to exceed pre-COVID levels by the end of 2023.
Inflation rates across the region have been influenced by lower commodity prices, easing supply constraints, and decelerating domestic demand. Some countries, like China, Cambodia, and Thailand, are now experiencing negative inflation, while others, such as Laos and Myanmar, are dealing with stubbornly high inflation due to factors like high prices of commodities and currency depreciation.
The report also sheds light on the impact of tourism on the region’s economies. The recovery of the tourism sector has been slower than expected, particularly in relation to arrivals from China and Japan. While some markets have shown faster recovery, including Japan, the EU, Australia, South Korea, New Zealand, and intra-region travel, elevated travel costs and currency depreciation have affected the purchasing power of travelers from the region.
The tourism sector in Cambodia, Malaysia, and Thailand has been affected by staffing gaps. Skilled roles, such as chefs and upper-level managers, have been particularly challenging to fill due to the slow return of both local and immigrant workers. Some laid-off workers have found employment in other industries or neighboring markets, creating staffing shortages in middle-management roles.
Overall, this economic update provides valuable insights into the varying growth trajectories, inflation rates, and tourism challenges within the ASEAN region. It highlights the importance of continued economic resilience and targeted efforts to support key sectors for sustainable and inclusive development.
