asia,nikkei.com

Supply chain moves, digitalization and net zero shift drive region’s momentum

Shipping containers in Bangkok: Southeast Asia now accounts for 8% of global exports and has surpassed the European Union as China’s largest trading partner.   © Reuters

A year and a half into a historic interest-rate upcycle, Southeast Asia’s economic prospects continue to stand out in a world faced with high inflation and soft demand. 

HSBC forecasts that the six largest economies in Southeast Asia — Indonesia, Thailand, Malaysia, the Philippines, Singapore and Vietnam — will grow 4.2% this year and 4.8% next year. This pace would far outstrip the 1.1% expansion expected in the developed world in 2023 or next year’s estimated 0.7%.

This acceleration is all the more remarkable given that inflows of Chinese tourism dollars have not returned to Southeast Asia as anticipated. For example, in Singapore and Thailand — both popular destinations for Chinese holidaymakers — tourist arrivals are running at only about one-third of pre-COVID levels.

A recovery in tourism would certainly be a welcome boon for Southeast Asia. But meanwhile, trade, the transition to net zero and digital transformation are set to power the region’s economic growth for decades to come and ensure that this dynamic region remains a global growth engine.

Southeast Asia has come a long way as a manufacturing dynamo. It now accounts for 8% of global exports and since 2020, has surpassed the European Union as China’s largest trading partner.

The region is benefiting from a restructuring of global supply chains as it sits at the crossroads of two of the world’s largest free trade agreements, the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

RCEP in particular, with its tariff reductions and business-friendly rules of origin, is increasing the appeal of Southeast Asia as a manufacturing base, a fact that more companies are recognizing. According to a recent HSBC survey, Asia-Pacific companies plan to base 24.4% of their supply chains in Southeast Asia over the next one to two years, up from 21.4% as of 2020.

Tiếp tục đọc “Southeast Asia’s economic outlook is only brightening” →