ASEAN Economic Outlook: A glimmer behind dark clouds

In the 43rd ASEAN Summit of 10 nations, President Ferdinand “Bongbong” Marcos has been briefed in Jakarta on the current economic conditions among ASEAN member economies, as well as the prospects and potentials in the Asia Pacific rim in the next 12 months. Earlier this year, the ASEAN secretariat projected that the 10-member regional cooperation, and the entire Asian region will remain one of the fastest-growing regions of the world in 2023 but economic growth will likely fall marginally.

The economic experts are of the opinion that such decline already started to manifest in the last quarter of 2022. This is largely due to worsening global economic conditions and tightening monetary policy. Indeed, events indicated that ASEAN member economies entered the year 2023 with a host of evolving economic pressures. Undoubtedly, many of such pressures have in fact acted as a drag on growth globally. As such, the Asian Development Bank recently revised its 2023 forecast to 4.7 percent for ASEAN as global demand weakens. The second half of the year will most probably see economic conditions that are more conducive to organic growth as falling inflation provides central banks with greater rate flexibility.

The global experts watching closely the ASEAN are of the view that this development in the region should complement increasing economic activity in China They agree that the ASEAN region will remain attractive to foreign direct investment, with trends in commercial and state investment likely to remain consistent throughout the year, despite a more challenging macroeconomic environment. They hasten to interject a caveat however that forecasts do vary, and this can be partially dependent on how organizations categorize the region. Credit Suisse analysts expect the growth of the ASEAN-six economies – Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam – to moderate to 4.4 percent in 2023 from a projected 5.6 percent in 2022. Thus, the Philippine economic team of PBBM should now reexamine its figures and align them with ASEAN projections.

All these notwithstanding, all the 10 ASEAN economies are seeing hope and are discerning that there are glimmers of positive prospects behind the dark clouds of uncertainties. More hopeful figures put regional economic growth some way above the global average. The IMF has forecast global growth at 3.2 percent in 2022 and 2.7 percent in 2023. As such, ASEAN remains an attractive destination for international investment, providing investors with exposure to one of the fastest-growing regions globally. But then again, the initial projections are being scaled down both globally and regionally. This year 2023 is not really a boom year for the global economy but ASEAN can see some rays of hope amidst worldwide economic slowdown.

The Asians have this common philosophy that prosperity is a twin brother of difficulty. Thus it is widely believed that ASEAN nations could benefit from a privileged geopolitical position in future years as the US-China rivalry intensifies and both superpowers seek to deepen ties in the region. Both nations have highlighted their commitment to trade with ASEAN economies – China particularly through access to the Regional Comprehensive Economic Partnership (RCEP) agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The US only has free trade agreements with selected ASEAN countries.

The 10-member ASEAN is a huge arena of contention between China and the US. That is why US Vice President Kamala Harris has been dispatched by President Biden to the ASEAN Summit to closely watch the plans of ASEAN, while Chinese President Xi Jinping sent Prime Minister Li Quang to Jakarta to eavesdrop on ASEAN strategies and directions. The US-China rivalry over the region can well benefit the 10 member nations' economies. More investments are coming from both Washington and Beijing. Hopefully, a large slice should fall on the laps of the Philippines.