BMI Ratings
BMI Risk Ratings – Cambodia....6
BMI Risk Ratings – Laos.....7
BMI Risk Ratings – Myanmar.....8
BMI Risk Ratings – Asia Tables.....9
Asia – Ratings League Tables.....10
Executive Summary..... 11
Indochina Growth To Remain Resilient In 2012
Regional Outlook..... 13
Long-Term Political Outlook... 13
Risks And Opportunities To Watch In 2012....13
Following a relatively quiet year, we expect to see political noise grow louder across emerging Asia in 2012, particularly as economic
conditions deteriorate. In this article, we look at some low probability/high risk events that could threaten to erupt over the coming 12
months.
Economic Analysis.. 14
Is Emerging Asia Headed For Recession?.....14
Leading indicators across emerging Asia are signalling a much deeper economic slowdown, if not an outright contraction, in the coming
quarters. The lack of fiscal and monetary levers – both regionally and globally – is a major concern for 2012 growth, as is the fact that
Chinese demand has started to come unstuck.
Chapter 1.1: Political Outlook – Cambodia... 17
Political Risk Analysis..... 17
Opposition Walkouts A Concern.....17
Cambodias 2012 budget has passed through unopposed, with 86 votes in favour and none against. However, this seemingly smooth
passage was notable for the mass opposition boycotts rather than bipartisan support, and once again highlights the countrys splintered
democratic framework.
TABLE: Cambodia Political Overview... 17
Long-Term Political Outlook... 17
Addressing Corruption And Inequality Key To Political Stability....18
Cambodias long-term political outlook largely depends on the ruling Cambodian Peoples Party (CPP)s ability to address widespread
corruption and income inequality, which have been fuelling public dissent against the government in recent years.
Chapter 1.2: Economic Outlook – Cambodia... 21
Economic Analysis.. 21
Growth Set To Stumble In 2012...21
While latest activity data suggests a strong showing for the Cambodian economy in 2011, the flood-induced slowdown expected in Q411
should continue to play out in 2012 as external conditions deteriorate. We are forecasting real GDP growth of 6.3% and 4.8% this year
and next, below IMF (6.7% and 6.5%) and Asian Development Bank (6.8% and 6.5%) projections.
TABLE: ECONOMIC ACTIVITY ..... 21
Chapter 1.3: Key Sectors – Cambodia.... 23
Infrastructure.... 23
Chapter 2.1: Political Outlook – Laos.... 25
Long-Term Political Outlook... 25
Growing Dissent Against LPRP Poses Risk Of Upheaval.25
Laos long-term political outlook will depend heavily on how well the country balances between the need to spur economic growth to
achieve its millennium development goals, and the need to address widespread corruption and dissent against the government. Heavy
reliance on foreign aid and development assistance also means that the countrys policies will remain susceptible to the political and
economic interests of its much more powerful neighbours.
Political Risk Analysis..... 27
Key Political Challenges In 2012.....27
Laos economic growth has been relatively robust over the past few years. Although we expect growth to hold up, we highlight a number
of medium- to long-term political risks, which, if mishandled, may pose a significant impairment on the economy. Indeed, we have seen
how political challenges threatened the growth prospects of its larger neighbours, such as Thailand.
TABLE: Laos Political Overview..... 27
Chapter 1.2: Economic Outlook – Cambodia... 29
Economic Analysis.. 29
Hydropower And Mining Maintain Long-Term Attractiveness..29
We find Laos investment climate relatively attractive, especially for the hydropower and mining sectors. Strong demand for power
and resources, and the governments commitments to developing the sector bode well for both industries. We expect foreign direct
investment to remain strong over the medium-to-long term. That said, we believe that a dependence on resource wealth is not a
sustainable growth model and risks marginalising other industries within the economy.
TABLE: ECONOMIC ACTIVITY ..... 29
Chapter 2.3: Key Sectors – Laos. 31
Food & Drink..... 31
Chapter 3.1: Political Outlook – Myanmar... 33
Long-Term Political Outlook... 33
Regime Change From Within?.....33
Myanmar remains a military-dominated state, despite holding elections in November 2010. We expect the military to retain broad
authority in the near term, but we see substantial opportunity for political and economic reforms over the next decade as the government
looks to improve its legitimacy.
Domestic Politics..... 35
A Myanmar Spring?..35
The recent pace of reforms in Myanmar has been greatly encouraging, with the decision to halt a controversial Chinese dam project
and the release of over 6,000 prisoners positive signs of change. However, in view of the governments history of strategic placation
and token gestures, we will need to see a more sustained push for serious reform before we begin to reassess the countrys ability to
harness its massive economic potential.
TABLE: Myanmar Political Overview.... 36
Chapter 3.2: Economic Outlook – Myanmar.... 39
Economic Analysis.. 39
Reforms Continue, Economic Boom To Follow?...39
On the heels of recent surprisingly fast-paced reforms, potential opportunities for Myanmars economy are perhaps the highest they
have been in over five decades.
TABLE: ECONOMIC ACTIVITY .. 39
Chapter 3.3: Key Sectors – Myanmar.. 43
Mining.... 43
TABLE: PER CAPITA FOREI GN DIRECT INVESTMENTS ... 43
Chapter 4: BMI Global Assumptions. 45
Global Outlook.. 45
Eurozone Break-Up Risks Rising ...45
TABLE: GLOBAL ASSUMPTIONS ..... 45
TABLE: DEVE LOPED STATES REAL GDP GROWTH FORECAST .... 46
TABLE: REAL GDP GROWTH CONSENSUS FORECASTS .... 46
TABLE: EMERGING MARKETS REAL GDP GROWTH FORECAST ... 47