Malaysia Leads Southeast Asia GDP Downgrades Amid Delta’s Grip

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Malaysia leads growth downgrades by economists across Southeast 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% expansion, according to the latest economist survey results compiled by Bloomberg. Thailand, downgraded to 1.2% from 2.4% 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% compared to a previous estimate of 6.3%. 

The rapid spread of the highly infectious Delta variant and low vaccinate rates have caught much of Southeast 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 SA 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 Southeast Asian growth forecast in its outlook supplement to 4% from 4.4%.  

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