Southeast Asia's stronger growth may be weaker than it seems

Stronger-than-expected growth in some Southeast Asian economies has sparked optimism the worst of a slowdown may be over, but high debt and weak exports make sustaining the momentum a challenge for policymakers as US interest rates go up.

The Philippines wrapped up the region's third-quarter GDP performance on Thursday with annual growth of 6 percent, up from 5.8 percent in the second quarter.

Annual growth also picked up in Indonesia and Thailand, the region's two largest economies, taking weighted average growth in the region of some 500 million people with a combined GDP of $2.2 trillion to 4.2 percent, according to Capital Economics.

Officials from Bangkok to Jakarta have been quick to seize on the improved growth numbers and consumer confidence as evidence the worst slowdown since the 2009 crisis is over.

"We think growth in the third quarter is a turning point," said Indonesian central bank Governor Agus Martowardojo.

Economists and businesses hold a less sanguine view.

China's slowdown and recession in Japan, both leading markets for the region, high consumer and corporate debt at home and the risk of more market ructions when the US raises interest rates, are all clouding prospects ahead.

"It's too early to call a trough," said economist Joseph Incalcaterra at HSBC in Singapore. "We forecast growth in the fourth quarter to be weaker just about everywhere."

Araya Sawaengwong, 48, who owns a small music shop in a Bangkok mall, said the economy was in bad shape.

"I'm struggling to sell my stuff as there are not many buyers these days. Buyers now become sellers competing to sell things but nobody wants to buy...I don't think things are getting any better."

Economic growth has been deceptively underpinned by a fall in imports rather than strength in exports for some countries.

Indonesia's exports in the third quarter fell 0.7 percent from a year earlier, but external demand still contributed 1.2 percentage points to the economy's 4.7 percent growth as imports tumbled by 6.1 percent.