Asia Regional Integration Center

Economic growth continued to slow to 5.0% in FY2019—from 6.1% in FY2018 and well below the 7.0% average of the past decade—as credit constraints undermined domestic demand. Agriculture grew by 3.7% in FY2019, while industry growth slowed to 1.8% from weak manufacturing and construction. Services added 3.5 percentage points to growth, expanding 7.0% mainly due to improved financial services, real estate, and other professional services. On the demand side, a decline in investment severely dragged down growth. After growing an annual average 7.2% over the past decade, gross fixed capital formation contracted by 0.6% in FY2019, its worst showing since FY2002. GDP growth is forecast to slow further to 4.0% in FY2020 before rebounding sharply to 6.2% in FY2021, assuming the COVID-19 pandemic is contained by the second half of 2020.