While many parts of the world are faltering on the edge of recession, the Association of Southeast Asian Nations (ASEAN) in the first half of 2022 has been on an economic rebound, according to Eurasia Review.
In its article, the journal cited the forecast by the World Bank (WB) as showing that GDP in Vietnam, the Philippines, and Malaysia will grow in excess of 6 per cent, while growth rates of Indonesia and Cambodia are expected around 5 per cent. Singapore, Thailand, Laos, and Myanmar are all expected to grow around the 3 per cent mark.
Most of this grow has been underwritten by the strong expansion of exports and a resurgence of local demand and investment, according to Vietnam news agency (VNA).
There is massive urban development occurring across the region, with tourism very quickly rebounding after travel restrictions have been lifted.
The major economic shift within ASEAN is the growing level of intra-ASEAN trade and investment. This is where the ASEAN grouping may be partly protected from any world economic downturn, VNA reported.
In the short-term ASEAN has a buffer against any upcoming international recession. Most economic analysts still believe ASEAN will remain relatively buoyant over the next year.
However, some of the ASEAN countries are facing a number of potential problems. Although exports have been rapidly growing in Indonesia, Malaysia, and Vietnam, the international economic slowdown could dampen demand later in the year and 2023, it reported.
Weakening currencies, increasing public and private debt, rising energy costs, and a massive expansion of the money supply over the last two years has fuelled a bout of inflation.
ASEAN’s economic resurgence has created some chronic labour shortages in Singapore, Malaysia, and even Thailand. This could hamper potential construction and manufacturing growth, if these issues are not resolved.
The challenges ahead for ASEAN will be keeping debt and inflation in control, dealing with lower export and foreign investment growth, dealing with eroding currency exchange rate rates, and another bout of foreign currency speculation, if the world goes into a deep recession, it said.
