Economic forecast for ASEAN in the near-term remains optimistic, IHS Markit Asia Pacific Chief Economist Rajiv Biswas said Monday.
Biswas attributed the optimistic outlook for the region to the continuous robust economic growth of Vietnam, the Philippines, Myanmar, Laos, and Cambodia, which are expected to increase their gross domestic product by more than 6.0 percent between 2017 and 2020.
He added that Indonesia, which accounts for 40 percent of ASEAN’s total GDP, is seen to sustain its growth of around 5.0 percent over the next three years.
Likewise, Malaysia’s economy is expected to grow the same pace with Indonesia.
“IHS Markit forecasts that ASEAN GDP will increase from $2.7 trillion in 2017 to $5.5 trillion by 2025, with ASEAN becoming the third growth engine for the Asia-Pacific region after China and India,” Biswas said in an e-mail.
ASEAN’s economy is expected to surpass United Kingdom’s economy this year and exceeding Japan’s GDP by 2026.
The economist noted that China has been supporting the rapid growth of ASEAN as the region’s exports to the giant economy ballooned from USD22 billion in 2000 to $134 billion in 2015.
This is also backed by rising number of Chinese tourists visiting ASEAN, boosting the region’s tourism industry.
From 2.3 million Chinese visitors in 2000, ASEAN hosted 18.6 million Chinese tourists in 2015.
Biswas noted that ASEAN’s economic reforms and trade liberalization will further support the region’s growth in the future.
“One of the key factors that has supported the economic rise of ASEAN has been the commitment of ASEAN governments to pursuing trade liberalization,” he said.
“Many ASEAN governments have also pursued an extensive agenda of macroeconomic reforms and strengthening financial markets regulation since the East Asian crisis. A number of ASEAN governments have reduced fiscal deficits and government debt to GDP ratios, strengthened financial supervision and increased banking system prudential capital ratios,” he added.
The economist also emphasized that with ASEAN’s 625 million population, the region is becoming an attractive destination for manufacturing.