ASEAN navigates steady growth amid near-term risks
With the global economy picking up, prospects for the ASEAN region look good. But uncertainties remain, particularly surrounding the prospects for oil prices and the US economy.
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The coast is relatively clear for regional economies. The solid growth forecast is anchored by a recovery of the global tech sector and the sustained pace of domestic demand growth. Export growth has already been picking up across the region, underpinned by the improving global economic conditions. Interest rates are expected to peak in the first half of 2006 for some countries.
A turning point is in store for regional currencies after uninspiring performance in 2005. Short-term risks remain skewed to the downside – these include high and volatile oil prices, the strength of the US economy, especially its property market, and a significant tightening of monetary conditions. Last but not least are geopolitical risks and the threat of an avian flu pandemic.
Global indicators pointing north
The global expansion remains broadly on track, bolstering hopes for a sustained steady growth path in 2006. OECD leading indicators for major industrialized countries have generally turned up in recent months. Global manufacturing and trade are strengthening and export growth has picked up, especially for the tech-dependent countries. Global semiconductor sales have been tracking a positive growth trend for the fifth consecutive month after bottoming out in mid-2005.