Still, growth in most of the region should pick up as economic activity revives in the advanced economies, declining oil prices boost consumption and investment growth revives, the report believes, while pointing to “broadly favourable” economic fundamentals. The fall in core inflation has given most countries more scope for supportive monetary policy. Current account and capital account balances have deteriorated somewhat, but overall external positions remain sound. Financial markets in the region have shown relative resilience in the face of declining net capital inflows and uncertainties linked to the prospects for monetary tightening in the US and slower growth in China. These uncertainties pose downside risks for the outlook, with further risks coming from adjustments to the boom in real estate prices and in credit growth in a number of countries.
Find out more about Economic Outlook for Southeast Asia, China and India 2016: Enhancing regional ties at http://oe.cd/M5
©OECD Observer No 306, Q2 2016