Impatient with the sluggishness of the economy, local investors are losing confidence in the pace of economic reform and blame it on a lack of direction by the National League for Democracy (NLD)-led government after two-and-a-half years of its administration.

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Cambodia has become more autocratic and its government’s claim of stable economic development rests on uncertain basis, according to a comprehensive new report. The Bertelsmann Stiftung’s Transformation Index (BTI), published on Thursday, claims that the quality of Cambodia’s democracy, market economy and governance performance has deteriorated since its 2016 report.

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Governments in Southeast Asia are ramping up spending just as central banks are putting away their policy-easing tools. From Thailand to Malaysia, states are boosting budgets for railways, roads and other infrastructure projects to help bolster growth in a region facing uncertain global markets and the threat of a pullback in trade under U.S. President Donald Trump. “Fiscal is going to be the main story this year,” said Selena Ling, an economist at Oversea-Chinese Banking Corp. in Singapore. “All of these countries don’t really have much room for cutting rates further. Their currencies may weaken more if rates are lower.” After years of policy easing, central banks in Southeast Asia are turning their focus to reducing currency volatility and warding off inflation risks. Economists surveyed by Bloomberg predict the Philippines may be among the first central banks in Asia to raise interest rates this year, while Indonesia and Thailand are set to keep policy unchanged.

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In line with expectations, Bank Indonesia has continued with its monetary easing by keeping its benchmark sevenday repo rate at 4.75 percent on January 19 to maintain stability amid growing global uncertainty. The move anticipated a change in direction of United States economic policies brought about by president-elect Donald Trump, who will assume his new duties on January 20. BI spokesman Tirta Segara said that since the new US president would likely adopt aggressive economic policies, particularly to speed up the US’ economic recovery, the Federal Reserve might increase its fund rate several times this year. This could negatively affect the cost of borrowing, as well as the stability of the rupiah. Internally, the move also aims at tackling rising inflation, triggered by some recent measures, such as a cut in electricity subsidies and higher administration fees for vehicle ownership documents, said BI economic and monetary policy director Juda Agung.

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The world appears to be experiencing a globalisation backlash with an assault coming from both economic and societal fronts. In this changing world, the two defining characteristics of globalisation – increased global trade and greater economic participation in trade – now look poised for an extended downward trend. While leaders, bankers and economists meet in Davos this week to extol the virtues of a globalised world, their favoured view of the global approach is not one that is shared the world over. Global trade is no longer driving global growth like it once was. It grew last year at just 1.7 percent, lagging world economic growth for the first time in 15 years and for only the second time since 1982, according to the World Trade Organisation, which expects a further slowdown in 2017. The decline in world trade, cross border lending and foreign direct investment, and the increase in protectionist measures together will have profound implications for cross border global flows. And reversal of these multi-decade dynamics is likely to be have an impact in Asia.

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