ASEAN Economies Await a Cloudy 2024 Amid Export Worries
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By forbes.com
Insight | January 08, 2024
Southeast Asia's economic growth is expected to improve next year, but uneven gains may occur due to varying macroeconomic conditions. Trade-reliant countries are not yet out of the woods, as export slowdowns from weak Chinese and global economies impacted their performance this year. Singapore's government predicts growth between 1% and 3% for 2024, based on a recovery in global demand for electronics. However, Singapore's officials are cautious about external factors, with GDP growth in major economies like the U.S. and eurozone expected to slow further in the first half of 2024. China's weak property sector and domestic consumption have weighed heavily on Southeast Asian economies, particularly through trade.
Singapore's GDP figures for the July-September quarter showed a decline of 18.8% in benchmark non-oil domestic exports, while headline GDP growth improved to 1.1%. Thailand and Indonesia experienced slower growth, with 1.5% and 4.9% respectively, due to weak external demand. Analysts at BMI revise Thailand's 2023 forecast from 2.8% to 2.5%, expecting growth to pick up to 3.8% in 2024. Malaysia, the Philippines, and Vietnam reported better GDP figures in the third quarter, with growth rates of 3.3%, 5.9%, and 5.3% year-on-year.
HSBC predicts collective growth for the ASEAN-6 major economies of Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam to be 4.6% in 2024, up from 4% this year. However, individual growth prospects vary for each country, with Singapore's growth ranging from 2.4% to 6.3%. Export-oriented economies, particularly Singapore, Vietnam, Malaysia, and Thailand, are not out of the woods, and a gradual recovery in the global trade cycle is expected. ASEAN has also experienced inflation following Russia's invasion of Ukraine and rising costs amid Middle East conflict. To reduce business costs, it is crucial to control inflation, continue public spending, and lower policy rates.
Fitch Ratings (an American credit rating agency) predicts a sharp fall in inflation in Southeast Asia, including Indonesia, to boost households' purchasing power. However, this may be offset by external factors. The ASEAN+3 Macroeconomic Research Office predicts inflation in Southeast Asia, China, Japan, and South Korea to moderate to 2.6% in 2024. However, concerns about a spike in global food and energy prices have sparked further inflation concerns. The growth outlook for ASEAN+3 is uncertain, with a global energy shock and economic slowdown potentially causing significant damage.