The Southeast Asian market is poised for significant economic growth, underscored by a myriad of contributing factors that hold promise for the region's future.
Last December, we visited our clients in Turkey, and part of our discussion was about the economic growth potential for countries in Southeast Asia. So here it is! We have summarised the key economic growth drivers as well as the GDP growth forecast for quick reference.
INDONESIA: Golden Indonesia 2045
The Indonesian economy continues to show strong growth. Goldman Sachs projects the country to become the world’s fourth-largest economy in 2050.
🇮🇩 Key Growth Drivers
Indonesia changes in fiscal, financial, and trade policies.
Anticipated adjustments in fiscal, financial, and trade policies are set to bolster government revenues, primarily attributed to the impact of tax reform policies.
New Capital City “Nusantara”.
The total cost of investment is expected to be about USD 32 billion by its completion in 2045 to accommodate 500,000 civil servants. In 2024 the government allocated about USD 2.7 billion to construction. The investment will boost the regional economy by 4-5 times with job creation about 4.3-4.8 million jobs in East-Kalimantan by 2045.
Indonesia continues to focus on sustainable economic development.
The government has launched the Golden Indonesia 2045 vision to boost its competitiveness by focusing on developing protection schemes, green economy sector including renewable energy, downstreaming industries related to mining and non-mining sectors e.g., minerals, plantation products, and marine products.
THAILAND: Navigating Recovery
Thailand's economy continues to navigate recovery from COVID-19 amidst global trade tensions.
🇹🇭 Key Growth Drivers
Government spending.
The Thai economy is poised for growth under the new government, with a 9.3% increase in the 2014 fiscal budget compared to the previous year. The government has unveiled THB 652 billion in new investment plans for 150 infrastructure projects, including motorway extensions and monorail lines, over the next two years. Additional proposals being considered are a one-off digital cash payout, a land bridge project linking the Gulf of Thailand with the Andaman Sea, new free trade agreements (FTAs), and green industry initiatives.
Export growth continues.
Thailand expects foreign arrivals to rise again.
SINGAPORE: Innovating, Connecting, Thriving
Revival in global demand, strategic partnerships, particularly with China, and continue to thrive in sectors like aviation, tourism, and electronics
🇸🇬 Key Growth Drivers
Recovery in global demand.
The electronic sector, precision engineering and wholesale trade especially for machinery and equipment continues to drive Singapore’s economic growth. Singapore also continues to expand its business collaboration into China as the second largest country after Malaysia where Singapore companies have an overseas presence in with the recent MOUs to advance bilateral trade and investment between both countries.
Strong rebound in air aviation and tourism industry
Innovative hub especially for electronic products.
MALAYSIA: Resilient Economy
The Malaysia Government is going to speed up more growth-friendly policies to drive the economic growth
🇲🇾 Key Growth Drivers
Electrical & Electronic Exports to serve as growth driver.
E&E sector accounts for ~7% of Malaysia's GDP, with semiconductor devices and electronic integrated circuits constituting a quarter of the nation's total exports. In light of the global shift towards digitalisation, the semiconductor market is expected to experience growth, thereby enhancing Malaysia's export performance.
Implementing economic masterplans and Fiscal Responsibility Act (FRA) 2023.
Higher FDI inflow especially to the technology sector.
PHILIPPINES: Strong Growth Momentum
Philippines to be one of the fastest growing economies among the major economics in Asia
🇵🇭 Key Growth Drivers
Private Consumption and Structural Reforms.
The Philippine economy is projected to continue its robust growth, primarily fueled by strong private consumption alongside the continued implementation of structural reforms aimed at improving the country's macroeconomic environment.
Public Infrastructure Spending and Manufacturing Expansion.
Macroeconomic Policies and Fiscal Frameworks.
VIETNAM: Optimistic Growth
Continue its economic growth momentum due to the continued investment in manufacturing sector especially in electronic products
🇻🇳 Key Growth Drivers
Free Trade Agreements and International Trade: Vietnam's participation in multiple free trade agreements, such as the CPTPP and EVFTA, will continue to provide competitive advantages in trade, enhancing its export sector and attracting foreign investment. The reduction of tariffs and non-tariff barriers through these agreements is expected to bolster Vietnam's export economy significantly.
Foreign Direct Investment (FDI): Continued strong FDI, driven by Vietnam's attractive investment climate due to competitive labor costs and a growing network of free trade agreements. This is further bolstered by global shifts in manufacturing supply chains, which have favored Vietnam as an alternative to China due to geopolitical tensions and supply chain diversification strategies.
Vietnam focus on construction to support its rapid economic growth. The country's 2030 master plan for transport infrastructure, which could be worth as much as $65 billion, includes the construction of 5,000 kilometres of expressways, a deep water port in Hai Phong, high-speed rail routes along major north-south arteries, and the completion of Long Thanh International Airport near Ho Chi Minh City.
CAMBODIA: Dynamic Expansion
Leveraging RCEP for diversified export growth in the automotive, electronics, and solar sectors, paired with developments in tourism and services
🇰🇭 Key Growth Drivers
Trade Agreements:
Participation in regional trade agreements such as the Regional Comprehensive Economic Partnership (RCEP) is expected to boost trade, with increased market access and integration into regional value chains enhancing Cambodia's export potential.
Non-Garment Manufacturing
Service Sector
LAO P.D.R.: Economic challenge
Navigating growth amid reforms and challenges - Addressing high debt, enhancing revenue, and expanding financial solutions for sustainable advancement
🇱🇦 Key Growth Drivers
Implementation Challenges.
Laos’ economy faced several challenges including high debt burden, poor revenue collection, limited financing options, and low foreign currency reserves are undermining development prospects. Though its economy is expected to be in growth phase, its progression depends largely on the government implementation of policy reforms and its ability to manage internal and external economic pressures.
Chinese Investment
Renewable Energy Projects
Growth potential in service sector
MYANMAR: Structural Reform
The overall outlook for Myanmar's economy remains grim, with political instability and the pandemic preventing any rapid recovery.
Economic recovery falters as rising conflict, trade and logistics disruptions, withdrawal of major international investors to unemployment spikes, currency collapse, and internet blackouts, all contributing to an environment of heightened risk and uncertainty for businesses operating in Myanmar.
For more information about the data, please contact our Associate Business Analyst
Paya Martplakorn (Paya)
Associate Business Analyst
Email: pmartplakorn@canvassco.com