After growing rapidly in 2010 at 7.2 per cent, the Southeast Asian economies are showing signs of cooling, but are not necessarily collapsing to 2008–09 levels. According to the estimates of the International Monetary Fund (IMF), the Southeast Asian economies grew at a moderate rate of 5.4 per cent in 2011, with Indonesia growing at 6.4 per cent, while Singapore and Malaysia are each estimated to have grown by 5.2 per cent (Table 1). The economies’ ability to undertake substantial fiscal and monetary policy responses has benefited the region as a whole.

In general, the output expansion in 2011 was driven in most cases by broad-based domestic demand. Private consumption was strong across most countries, despite rising inflation. Consumption benefited from increases in employment, farm incomes (owing to favourable prices for agricultural commodities), and wages (Singapore, Malaysia, the Philippines). Private investment was also robust in most of Southeast Asia in 2011, encouraged by high capacity utilization, growth in credit, and positive business sentiment.

In 2011, the contribution to growth from net exports was mixed. Countries like Singapore, Malaysia, and the Philippines, who are more open to trade, saw much slower export growth than in 2010 on weaker external demand. Imports rose across the region, driven by buoyant private consumption and investment, and larger volumes of oil and commodities.

During the year, the economies of Southeast Asia were hit hard by the supply-chain disruptions, first from the March earthquake in Japan and then later from the flooding in key areas of Thailand. This affected the manufacturing activities and exports from these countries.

In 2010 and 2011, some important characteristics emerged among the Southeast Asian economies. First, the growth performance in the region has been more divergent; while Indonesia is looking the most resilient around 6 per cent, growth momentum seems to be most volatile in Singapore and Thailand. The rest are in between these two groupings.