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ASEAN’s economic performance remains largely unimpressed amidst all the turbulence, from elections to geopolitics. Growth in the second quarter of this year accelerated for Vietnam, Malaysia and the Philippines, while Singapore recorded stable growth. Thailand has yet to release figures, but the latest polls expect that the country’s economic growth picked up some pace.
In its July update, the International Monetary Fund (IMF) left its growth projection for the ASEAN-5 countries – Indonesia, Malaysia, the Philippines, Singapore, and Thailand -unchanged, expecting 4.5% growth this year and 4.6% in 2025.
The economic future for ASEAN seems bright. A recent study found that the region’s growth could even gain more momentum over the next ten years, outpacing China’s growth.
According to the “Southeast Asia Outlook 2024-2034”, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam could grow by an average of 5.1% annually until 2034. This would outpace China’s projected growth of 3.5% to 4.5%.
The report by Angsana Council, U.S. consultancy Bain & Co. and Singapore’s DBS Bank sees Vietnam in the lead with 6.6%, followed by the Philippines with 6.1%. Singapore is projected to be the slowest, with 2.5% growth.
ASEAN growth – capitalising on individual strengths
„Over the last 30 years, Southeast Asia has underachieved its potential. However, the seeds of a resurgence have been sown,“ the report stated. “Southeast Asia’s growth will be driven by stronger domestic economies and a resurgence in investment catalysed by ‘China + 1’ supply chain shifts.”
Over the past years, a growing number of companies have been shifting to Southeast Asia, benefiting from lower labour costs, good infrastructure, and the region’s export strength. The Outlook 2024-2034 underlines that each country has its own strengths. “Malaysia has reliable infrastructure for data centres and semiconductor manufacturing; Thailand can leverage its experience in combustion-engine vehicles in the electric vehicle market; and Singapore can apply its advanced manufacturing skills to the next generation of semiconductors and pharmaceuticals.”
On the other hand, Indonesia is establishing itself as a global centre for producing electric vehicles and batteries due to its rich nickel reserves.
As one of the biggest growth opportunities for Southeast Asia, the report sees the green transition.
“The region has ample natural resources to produce low-cost energy. The Philippines and Vietnam have substantial offshore wind potential, and the region has vast untapped solar and hydropower availability,” the report highlights.
