ASEAN+3 region expected to grow by 4.5 percent in 2024

In the latest edition of the ASEAN+3 Regional Economic Outlook (AREO) 2024, the ASEAN+3 Macroeconomic Research Office (AMRO) has provided an optimistic forecast for the region’s economic growth.

The report indicates an upward trend, with the ASEAN+3 region expected to grow by 4.5 percent in 2024, a slight increase from the 4.3 percent growth of the previous year. Looking ahead, AMRO projects a growth rate of 4.2 percent for 2025.

The driving force behind this year’s growth is primarily robust domestic demand, bolstered by rising household incomes and a resurgence in investment activities. Additionally, a revival in exports, partly fueled by the global semiconductor upcycle, along with the ongoing recovery of the tourism sector, are set to contribute to the region’s economic momentum.

The ASEAN countries, in particular, are poised to see growth rates of 4.8 percent in 2024 and 4.9 percent in 2025. The Plus-3 countries are also expected to maintain strong growth figures at 4.3 percent and 4.1 percent, respectively, for the same periods.

With global commodity prices showing signs of stabilization, inflation within the ASEAN+3 region—excluding Lao PDR and Myanmar—is forecasted to decrease from 2.8 percent in the previous year to 2.5 percent in 2024, and then to 2.3 percent in 2025.

However, AMRO cautions against complacency, highlighting potential risks that could derail the region’s growth trajectory. These risks include a sudden surge in global commodity prices, a slowdown in China’s growth, or an escalation in geopolitical tensions. AMRO’s Chief Economist, Hoe Ee Khor, emphasizes the need for ASEAN+3 economies to rebuild their policy buffers to prepare for such uncertainties.

The report also reflects on the lingering effects of the COVID-19 pandemic, which officially ended nearly a year ago according to the World Health Organization. The pandemic’s impact on economic activity, labor markets, and capital formation, particularly in infrastructure, continues to be felt across the region. The recovery in capital formation has been notably sluggish, with trend growth for most regional economies still below pre-pandemic levels.

To reinvigorate growth, AMRO suggests that boosting investment and leveraging technology to enhance productivity and resilience is essential, especially for smaller firms. The organization also advocates for increased regional collaboration to address three key secular trends: aging populations, shifts in global trade, and rapid technological advancements.

While these structural changes present challenges, they also offer opportunities for new growth avenues and productivity enhancements. Striking a balance between the risks and opportunities is crucial for the ASEAN+3 region to achieve sustainable, resilient, and inclusive growth.

Allen Ng, AMRO Group Head and one of the lead authors of the AREO report, points out that aging is a significant challenge for the region. However, he also notes the importance of harnessing the ‘longevity dividend’—the benefits of longer, healthier lives—to ensure productive aging for the region’s populations.

The ongoing shifts in global trade dynamics, while raising concerns about traditional export strategies, are simultaneously opening doors to new possibilities. For instance, the surge in foreign direct investment (FDI) into several ASEAN economies and the robust growth in exports of digital services are promising developments.

Yet, the rapid advancements in technologies like Generative AI raise questions about the future landscape of industries and employment in the region. To navigate these changes, AMRO underscores the importance of prioritizing strong policies that support growth across various potential futures. This includes a focus on deepening infrastructure development and fostering innovation and social inclusion.

Through this comprehensive analysis, AMRO’s AREO 2024 offers valuable insights into the economic prospects of the ASEAN+3 region, highlighting both the potential and the challenges that lie ahead.

Global Health engages Robin Armstrong to develop ASEAN Markets

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