Malaysia leads S-E Asia GDP downgrades amid Delta variant's grip; S'pore only country to buck trend

For the current quarter, forecasts for Malaysia's GDP growth were slashed by the most in the region.
For the current quarter, forecasts for Malaysia's GDP growth were slashed by the most in the region.ST PHOTO: KUA CHEE SIONG

HONG KONG (BLOOMBERG) - Malaysia leads growth downgrades by economists across South-east 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 per cent expansion, according to the latest economist survey results compiled by Bloomberg. Thailand, downgraded to 1.2 per cent from 2.4 per cent 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. It is now forecast to grow 6.5 per cent compared with a previous estimate of 6.3 per cent.

The rapid spread of the highly infectious Delta variant and low vaccinate rates have caught much of South-east Asia off guard. The region registered robust economic recovery in the second quarter, but that was flattered by comparisons with last year's crash.

The region is now suffering a sharp downward movement in private consumption and investment because of suppression measures, as well as inadequate fiscal and monetary support, said Natixis senior economist Trinh Nguyen in Hong Kong.

For the current quarter, forecasts for Malaysia's gross domestic product 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 South-east Asian growth forecast to 4 per cent from 4.4 per cent in its outlook supplement.