ASEAN economy will outperform most others, experts say
With the launch of the ASEAN Economic Community (AEC), the region’s economy will outperform most others in the world over the next decade and Southeast Asia could become the second-largest exporting economy in the world, according to leading bankers who spoke at a seminar in Bangkok last week.
Usara Wilaipich, senior economist at Standard Chartered Bank in Thailand, said the region’s expanding middle class and large labor force was already attracting significant investment from around the world. Many investors are unperturbed by the recent slowdown in exports – a problem that has affected Thailand’s growth figures – regarding it as a temporary phenomenon, and they are optimistic about the future, particularly the next decade, she said.
Her bank is fairly bullish on Thailand’s prospects this year compared to some others, forecasting growth of 4.1 percent on the expectation that exports will recover more strongly in the second half of 2015.
Two of the Kingdom’s key export markets are Japan and China. Economic reforms in Japan are already bearing fruit as consumers are starting to spend again, and reforms in China will also reinvigorate consumption of raw materials. Both are also major markets for all 10 countries of the Association of Southeast Asian Nations (ASEAN). They are also among the most important investors in the region.
This year, ASEAN is launching its free-trade zone, known as the ASEAN Economic Community, or AEC. The Community is expected to boost growth and investment in the region because of the easier movement of capital, goods, labor and services.
According to the Asian Development Bank, the AEC’s gross domestic product of $2.4 trillion means it would be the seventh-largest economy in the world if it were one nation. The ADB projects it will be the fourth largest by 2050. The Bank also says “ASEAN is one of the most open economic regions in the world, with total merchandise exports of over $1.2 trillion – nearly 54 percent of total ASEAN GDP and 7 percent of global exports.”
Standard Charter’s Usara said China is looking for manufacturing bases abroad because domestic wages are increasing by 6.9 percent each year, so the country needs to shift from labor-intensive production. Japan is growing again, and the depreciation of the yen has had an impact on manufacturers. But, it is an ageing society, so Japanese manufacturers must continue shifting production overseas, she said.
Thailand will achieve strong growth over the next decade if it can improve its logistics and transport infrastructure, and manufacture products to serve the growing numbers of middle-income people in the region, she said.
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