HSBC forecast the six largest economies in Southeast Asia ưill grow 4.2% this year and 4.8% next year. (Illustrative photo: AFP/VNA) An article publishedby the Tokyo-based newspaper on July 25 cited HSBC as forecasting that the sixlargest economies in Southeast Asia – Indonesia, Thailand, Malaysia, thePhilippines, Singapore, and Vietnam – will grow 4.2% this year and 4.8% nextyear. This pace would far outstrip the 1.1% expansion expected in the developedworld in 2023 or next year's estimated 0.7%.
This acceleration is all the moreremarkable given that inflows of Chinese tourism money have not returned toSoutheast Asia as anticipated.
A recovery in tourismwould certainly be a welcome boon for Southeast Asia. But meanwhile, trade, thetransition to net zero, and digital transformation are set to power theregion's economic growth for decades to come and ensure that this dynamicregion remains a global growth engine.
The writing noted that Southeast Asiahas come a long way as a manufacturing dynamo. It now accounts for 8% of the globalexports and, since 2020, has surpassed the European Union as China's largesttrading partner.
The region is benefitingfrom a restructuring of global supply chains as it sits at the crossroads oftwo of the world's largest free trade agreements, the Regional ComprehensiveEconomic Partnership (RCEP) and the Comprehensive and Progressive Agreement forTrans-Pacific Partnership (CPTPP).
According to a recent HSBC survey,Asia-Pacific companies plan to base 24.4% of their supply chains in SoutheastAsia over the next one to two years, up from 21.4% as of 2020.
As more companiesdiversify and adopt a "China+1" production strategy, Southeast Asiawill continue to gain market share. More global foreign direct investment willbe directed toward the region as the centre of gravity of global manufacturingcontinues to shift.
The transition tonet zero is a second structural trend that is bringing tremendous opportunitiesas Southeast Asia races to "green its grid", the articlenoted.
Most of the energy powering SoutheastAsia comes from fossil fuels, so it is encouraging that Indonesia andVietnam – two of the region's most dynamic economies as well as two of theworld's top coal-burning countries – have each announced Just Energy TransitionPartnerships with the Group of Seven and other developed nations.
Under this new fundingmodel, tens of billions of dollars in public and private finance will bemobilised, catalysing the decarbonisation of the two countries' power sectorsand facilitating their clean energy transition.
The third long-term source ofoptimism about Southeast Asia is the digital transformation of the region'seconomy.
Southeast Asia already hasa vibrant digital economy, which was worth nearly 200 billion USD as of last yearand is expected to surpass 300 billion USD in size by 2025. Add in aninternet-connected population of 460 million, and it is evident why companiesare transforming their business models to cater to changing customer behaviour.
As an economic engine with favourabledemographics, Southeast Asia is well positioned to capture the opportunities stemmingfrom these long-term trends, the article read./.
VNA
