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Southeast Asia Emerges as Front Runners of Global Growth

Jun 20, 2018 | Asia

The Association of Southeast Asian Nations celebrates its 50th anniversary for maintaining an overall stability: economic and social progress, a manufacturing powerhouse and relative political.

The ASEAN comprises some of the world’s fastest growing economies and the growth rate of more than 6% of Philippines and Vietnam are a proof to the stated fact.

The reason for the ASEAN’s expanding economy is its combined population of over 620 million and an economy of $2.6 trillion, which in return makes a huge investment market. World Economic Forum predicts that by 2020, the region will have the world’s fifth largest economy.

The goal of unifying economies yet remains far. Despite the blueprint in 2015 to do away with the trade barriers and create a single market allowing free flow of goods, the business market still face restrictions.

The changing governments in nations- like from democracy in Indonesia to a military junta in Thailand to communist governments in Laos and Vietnam, is hindering the growth of the business.

The founding nations of ASEA- Indonesia, Malaysia, the Philippines, Singapore and Thailand, was established in the 1967 in Bangkok to promote peace and uplift the economic development.
 Since their unification, the ASEAN’s have transformed from mostly poor and agricultural nations to one of the largest hub of production- from cars to mobile phones.

ASEAN economy over five decades:

• Economic Outlook-

From the ASEAN GDP of $37.6 billion in 1970, the GDP in 2016 increased to $2.6 trillion.

According to the BMI research, the ASEAN growth is seen at 4.9% the next year, where Myanmar, Vietnam and the Philippines show speedy expansion.

• Trade-

Since Singapore’s economy is based on export, it makes the country depend on the global growth cycle. Aided by cheaper labor costs, growing domestic demand and infrastructural improvements, Southeast Asia has become a manufacturing alternative to China.

According to the survey of the Capital Economics Ltd. Intra-regional, trading amongst the ASEAN members remains low when compared to that of the regional groupings like the EU. Also, trading makes up to a fifth of total trade, compared with more than 60 percent in the EU.

• Investment-

The demographic dividends have been beneficial for some of the countries in the region but for China, Japan and Hong Kong, this is contradicting their work forces since 2015. Nomura Holdings Inc. estimates suggest an expansion in the working population through 2020 for Southeast Asia.

The ASEAN’s strong development outlook is attracting more of investments. Coca-Cola Co.’s expansion in Vietnam and Myanmar while opening of Apple Inc.’s research centers in Indonesia, are a proof to this.

• Growing Investment-

According to United Nations Conference on Trade and Development, since 1970, foreign direct investments have increased almost 274 times.

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