MANILA—Combined gross domestic product (GDP) of the 10-member countries of Association of Southeast Asian Nation (ASEAN) is seen to surpass GDP of big economies across the world.
IHS Global Insight Rajiv Biswas said GDP of ASEAN is projected to hit USD2.6 trillion with economic growth expected at 4.6 percent.
ASEAN GDP is forecasted to reach USD2.5 trillion for the full year of 2016.
Based on IHS Global Insight world economic forecast, the region’s USD2.6-trillion GDP this year is higher compared to these major economies: India at USD2.4 trillion, United Kingdom at USD2.4 trillion, France at USD2.3 trillion, Brazil at USD1.7 trillion, Russia at USD1.5 trillion, and Australia at USD1.2 trillion.
“The ASEAN region is expected to benefit from a moderate improvement in global GDP growth from 2.4 percent in 2016 to 2.8 percent in 2017, with the US economy forecast to strengthen in 2017, supported by the incoming Trump Administration’s plans for deep corporate tax cuts and a boost to infrastructure spending,” said Biswas.
“This should provide a boost to ASEAN exporters as the US remains a key export market for many Asian nations, including Singapore, Malaysia and Thailand,” he added.
Taking the lead
The economist cited economic developments in Indonesia, the Philippines, and Malaysia which will fuel ASEAN’s GDP growth.
Indonesia, the region’s largest economy, is expected to sustain its growth at 5.0 percent in 2016 and 5.1 percent in 2017.
“Indonesian domestic demand is expected to be supported by the transmission effects of significant monetary easing in 2016,” Biswas said.
The Philippines’ robust domestic demand as well as its strong information technology and business process outsourcing (IT-BPO) sector and remittances support the rapid economic growth momentum of the country, according to the economist.
On the other hand, Malaysia’s economy is expected to benefit from improving global growth and its competitive ringgit.
Biswas noted that the higher average oil price in the world market, from USD44 per barrel in 2016 to USD58 per barrel in 2017, and the improving US economy will drive Malaysia’s GDP growth.
“A positive factor for the Malaysian export sector in 2017 is that the US economy, which is Malaysia’s third largest export market, is expected to grow more rapidly. Malaysian merchandise exports to the US measured in ringgit terms showed positive growth in 2016, up 9.7 percent year-on-year in the first eleven months of 2016,” the IHS economist mentioned.
The CLMV economies
Economic expansions of Cambodia, Laos, Myanmar, and Vietnam are seen to significantly contribute to the region’s GDP.
“The ASEAN frontier economies of Cambodia, Laos, Vietnam and Myanmar are also expected to show continued strong growth,” Biswas said.
In particular, Vietnam’s free trade agreement (FTA) with the European Union (EU) will push for brighter prospects in its economy as its crucial exports products — garments and electronics — will have better access to the EU market.
China as ASEAN’s major economic partner
Biswas added that China will remain a major economic partner of the region, with the giant economy’s increase in tourism visits to ASEAN and its Silk Road Economic Belt and 21st-Century Maritime Silk Road initiative.
He mentioned that Chinese tourists in Thailand have increased to an estimated of 8.8 million in 2016 from 7.9 million in 2015.
Likewise, Chinese tourists’ visit to Cambodia jumped by 20 percent in 2016.
He further noted that the extension of electronic visa scheme and significant increments in number of direct flights between Malaysia and China through the former’s airlines — Malaysia Airlines and Air Asia — have driven the growth in number of Chinese visitors to Malaysia to 26 percent in January to August 2016 period.
Figures from ASEAN Tourism Statistics Database also showed that China is the region’s second largest source of visitors next to the 10-member countries of ASEAN in 2014.
Chinese visitors to ASEAN increased from 9.3 million in 2012 to 12.6 million in 2013 and hitting 13 million in 2014.
Moreover, Biswas said the China-led Silk Road initiative will also pave the way for closer economic partnership with ASEAN member-countries and increased investments in the region.
“Many countries in Southeast Asia are expected to benefit from China’s ‘One Belt, One Road’ initiative over the medium term, which will help to accelerate infrastructure development and regional transport connectivity, facilitating the development of the Greater Mekong Sub-region as a new global manufacturing hub,” he said.
“China has also made significant bilateral trade and investment deals with a number of Asian developing countries, including Malaysia and the Philippines,” added Biswas.
ASEAN 2017 and beyond
This year also marks ASEAN’s 50th year of existence.
The 2017 ASEAN Summit will also be hosted by the Philippines, with President Rodrigo Duterte leading the official launching of the country’s chairmanship in Davao City on Sunday, Jan. 15.
In a previous interview, Trade Secretary Ramon Lopez said that ASEAN member-nations aim for the completion of text of the Regional Comprehensive Economic Partnership (RCEP)in this year’s summit.
RCEP is another multilateral trade agreement to facilitate flow of goods and services as well as investments among 10 ASEAN countries and its FTA partners including Australia, New Zealand, China, South Korea, Japan, and India.
The conclusion of RCEP will lead to the ratification of the agreement among 16 RCEP Participating Countries, followed by implementation of the regional pact which is expected to further facilitate growth in the region.
With these developments in the region, IHS’ Biswas said the ASEAN economic growth is expected to remains strong over the next decade, with GDP reaching USD6.4 trillion in 2027.