MANILA, Philippines — Growth in Southeast Asia’s exports could moderate next year amid expectations of weaker global economic growth, according to a unit of S&P Global Ratings.
Rajiv Biswas, Asia-Pacific chief economist at S&P Global Market Intelligence, said in a report that the region’s exports may be affected by the weakening global economic growth and the forecast of a slowdown in the US and European Union next year.
“After buoyant exports in 2022, ASEAN export growth momentum will moderate in 2023, notably due to weaker growth in the US and EU, which together account for around one-quarter of ASEAN exports,” he said.
Biswas said this would be mitigated by the continued growth of domestic demand and the gradual recovery of international tourism in Southeast Asia.
While the growth in Southeast Asia’s exports are seen to moderate, he said the region is expected to be resilient to the weakening global economy in the near term.
“However, a key downside risk to the ASEAN outlook would be if mainland China’s economy continues to experience sluggish economic growth in 2023 due to the continued impact of COVID-19 restrictive measures,” he added.
Mainland China has been ASEAN’s biggest exports’ market for the last 12 years, with an estimated 16 percent share of the region’s outbound shipments of goods.
Hong Kong accounts for a further seven percent of ASEAN exports.
Over the medium to long-term, Biswas said ASEAN is expected remain as one of the fastest growing regions in the world.
According to Biswas, ASEAN’s gross domestic product measured in nominal dollar terms is forecast to reach $6.4 trillion by 2030 from $3 trillion in 2020.
“Over the next decade, the ASEAN region will be one of the three main growth engines of the APAC (Asia-Pacific) region, together with China and India,” he said.
Biswas pointed out that ASEAN’s growing consumer market will make it a more attractive destination for foreign direct investments (FDI) as multinationals set up manufacturing and services capacity to tap the domestic demand in the region.
He added that the move of multinational firms to diversify supply chains following disruptions due to natural disasters, COVID-19 pandemic, and Russia’s invasion of Ukraine, would also support FDI inflows into ASEAN.
ASEAN, he said, are likewise seen to benefit from their membership of the Regional Comprehensive Economic Partnership (RCEP), which will help boost trade and investment flows among the 15 nations that have agreed to the trade deal.
RCEP, which was signed by ASEAN nations and trade partners China, Japan, South Korea, Australia and New Zealand, has entered into force in most of the member economies.
In the Philippines, RCEP has yet to take effect, but Trade Secretary Alfredo Pascual said earlier the current administration is committed to ratify the mega trade deal.
Biswas said one important advantage of the RCEP is the favorable rules of origin treatment, which would help build manufacturing supply chains within the RCEP region across different countries.
“This will help to attract FDI flows for a wide range of manufacturing and infrastructure projects into the RCEP member nations,” he said.
Biswas said the region could also benefit from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership Agreement, another large regional free trade deal, which has some ASEAN countries as members.
“Therefore the long-term outlook for the ASEAN region remains very favorable across a broad range of industry sectors in manufacturing and services,” he said.