Domestic
consumption will be a key driver as ASEAN economies continue to outperform
Western counterparts, according to ICAEW’s inaugural quarterly Economic
Insight: South East Asia report, launched today.
This coincides with an expectation that the
Western world’s share of global GDP will fall to under 50% within the decade,
marking the end of 500 years of economic dominance.
Produced by Cebr (The Centre for Economics and
Business Research), ICAEW’s partner and global economic forecaster, this is a
new quarterly snapshot analysis of key economic facts and trends, focusing on
the six largest countries in the Association of South East Asian Nations
(ASEAN); Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
The report predicts that EU-styled political
integration is unlikely for ASEAN in the foreseeable future owing to the large
difference in economic development and national income levels. However, the
relationship between member nations has evolved and ASEAN has changed from a
group of countries that compete for foreign investments into an assembly that
mutually reinforces progress through greater regional linkages and trade.
Speaking at the launch of the Economic Insight
at the Fullerton Hotel in Singapore, Douglas McWilliams, chief executive of
Cebr, said: “South East Asian countries span a wide range of income economies
and the increased specialisation and division of labour within ASEAN will be of
great benefit to member states. Competitive labour costs in low and
lower-middle income countries will become increasingly attractive for global
companies seeking to site their manufacturing bases, while extensive fossil
fuels deposits and land resources will provide member states the resources to
fuel their growing economies.”
He continued: “The success of the Iskandar
Malaysia economic zone in South Johor is one obvious example of how regional
cooperation is mutually beneficial to partner countries, with Malaysia’s highly
productive, yet affordable, labour force complemented by Singaporean know-how.”
Mark Billington, Regional Director, ICAEW
South East Asia, said: “ASEAN was found to be the most economically successful
emerging region in GDP growth terms since 2010, and it is expected to
outperform the rest of the world economy going into 2012. Growing private
consumption among the expanding middle classes of emerging ASEAN economies is
expected to be the main driver for long-term sustainable growth. Growing the
pool of finance professionals with international experience and the highest
technical knowledge is important for the ASEAN countries to make the most of
these opportunities.”
The report also found that from a longer-term
economic perspective, the challenge for most countries in the region is to make
a similar transition towards industrialisation that other ASEAN nations have
achieved before them. Vietnam will need to invest heavily in infrastructure and
education in order to replicate the success of Malaysia. Malaysia must take the
next step in forging an economic and regulatory system if it is to replicate
Singapore’s success in building an internationally competitive and widely
diversified industrial base.
Other key findings of the report include:-
Trade with China is expanding quickly ASEAN
export volumes to China have been rising more quickly than to other major
trading partners. India will take China’s place as a fresh source of growth
when the ageing population in China begins slowing down its economy from around
2030.
Monetary tightening and weak western growth to
curb trade The global economy is slowing noticeably after its strong 2010
performance, and a gradual reduction in both public and private sector debt
burdens in industrialised nations will hold back consumption, resulting in
several years of elevated unemployment and below-trend growth in western
economies of North America, Western and Central Europe.
Indonesia as the driver of regional growth
Indonesia provides 31 percent of ASEAN’s output expansion in 2010 and, with its
234 million people, is expected to make an even bigger contribution of 42.8
percent to ASEAN growth in 2012. Singapore is second with 21.5 percent,
followed by Thailand with 17.6 percent and Malaysia with 12.1 percent. Vietnam
contributed 5 percent despite its low per capita income level.
David Swartzemtruber
Business & Investment Opportunities
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