Fueled by desire for a better future, Southeast Asia, with its large, literate and dynamic young population of over 640 million people, is well on its way to becoming the 4th largest global economy by 2050.
In 2018, the estimated total GDP of all Southeast Asian states amounted to approximately US$2.92 trillion.
This is up from US$2.77 trillion in 2017, and is the peak of a steady ascent from US$1.6 trillion in 2009. Expected economic growth remains stable at 5.2 percent for 2018 and 2019.
Forging Global Connections for a “Super” Economy
Leading the economic charge is the Association of Southeast Asian Nations (ASEAN), a regional inter-governmental organization comprising ten countries in Southeast Asia.
It promotes inter-governmental cooperation and facilitates economic, political, security, military, educational, and sociocultural integration among its members and other countries in Asia.
Aside from the ASEAN Economic Community (AEC), which was formed in 2015 to develop a single market and potentially lift Southeast Asia’s economic output by 7 percent by 2025, ASEAN is forging ties with six Asia-Pacific states – including China and India – to create a Regional Comprehensive Economic Partnership (RCEP).
This “super” economy” would be the most ambitious regional trade agreement in the world, covering 48 per cent of the world’s population and 30 per cent of global trade .
RCEP would boost the economic growth of Southeast Asia, increase the region’s attractiveness as a trade and investment destination and double intra-ASEAN trade between 2017 and 2025.
Growing Steadily Amidst Turmoil
Amidst global economic turmoil, Southeast Asia’s economies are standing strong.
In Swiss business school IMD’s (International Institute for Management Development) World Competitiveness Rankings 2019, five Southeast Asian countries – Singapore, Indonesia, Malaysia, Thailand and Philippines – either retained their spots or jumped ahead.
In light of the Sino-US trade war, market watchers have pointed out that ASEAN countries stand to gain. Both US and Chinese firms are shifting production bases to ASEAN states to escape tariffs.
Take Vietnam. Since the US first imposed tariffs on China in April 2018, Vietnam’s economy has surged 7.9 percent due to one year’s worth of trade diversions.
The conclusion of the RCEP will also mitigate any impact from the trade war.
Explosion of ASEAN’s Digital Economy
Southeast Asia’s digital economy – a collective term for all economic transactions that occur online – will progress in hand with economic growth.
It is expected to expand 6.4 times from US$31 billion in 2015 to US$197 billion by 2025 according to the Economic Research Institute for ASEAN and East Asia (ERIA)².
The young, urban, tech-savvy population and the continuous surge of internet users also means that many developing ASEAN economies are leap-frogging old models: Moving straight from dollars to mobile payments (skipping credit cards), going from bargaining over the cost of tuk-tuk rides to mobile transport payment apps, like Cambodia’s Pass App for tuk-tuk hires (skipping metered rides).
This spirit of entrepreneurship, thirst for innovation and embracing of new technologies is powering an unprecedented era of growth in Southeast Asia.