The Asian Development Bank (ADB) on Friday, July 18 downgraded its 2014 economic outlook for Southeast Asia citing political tensions in Thailand and Vietnam and soft external demand in Indonesia.
ADB said in a supplement to its economic outlook for the region that it expected gross domestic product (GDP) to grow 4.7% for the year, compared with its April projection of 5%.
Indonesia's growth for the first quarter of the year slowed to 5.2% with low commodity prices and a temporary export ban on selected minerals slowing recovery in net exports, the bank said.
Analysts had previously warned that Indonesia, the region's biggest economy, faced a long period of uncertainty following last week's disputed presidential election, compounding problems as growth sits at 4-year lows and foreign investment shrinks.
In Thailand, the economy contracted 0.6% in the first 3 months of the year, as "political deadlock" hit domestic demand and the crucial tourism industry.
The economy was wracked by nearly 7 months of protests that saw 28 people killed and paralyzed the government of former prime minister Yingluck Shinawatra.
However, the bank said with a military coup in May consumer confidence had improved and there was a "tentative sign that a modest recovery may take hold in the second half of the year."
The bank also said adjustments were made to Vietnam's economic forecast due to the economic effect of tensions with China.
Relations between Hanoi and Beijing plummeted when, in May, a Chinese oil rig was moved near the disputed Paracel Islands in the South China Sea, which are claimed by both countries.
"Recent data suggest that Southeast Asia has softened ... as growth prospects faltered," the ADB supplement said, adding that it sees growth of 5.4% in 2015.
Stable growth for developing Asia
Its estimate for the gross domestic product (GDP) for developing Asia, which covers 45 nations, was unchanged at 6.2% in 2014 and 6.4% next year.
The growth outlook for developing Asia is stable, with the region projected to grow steadily, the statement said, adding that downgrades for Central Asia, Southeast Asia, and the Pacific were balanced by an upward revision for South Asia.
In Manila, Philippines where ADB is based, the lender said in April that the country's economy will likely grow below government targets this year and the next, tempered by higher inflation and interest rates.
ADB projected that Philippine growth would slow down to 6.4% in 2014 and 6.7% in 2015 from 7.2% in 2013. The forecasts are below the Aquino government's targets of 6.5%-7.5% for 2014 and 7%-8% for 2015.
Meanwhile, The ADB expects Chinese growth to remain at 7.5% this year with a slight drop to 7.4% in 2015.
It also said there was an improved outlook for India following the election of conservative Prime Minister Narendra Modi.
The region's GDP is now expected to grow 6.1% in 2015, compared to a previous estimate of 5.8%