economic outlook challenges for asean mohamed ariff n.
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Economic outlook & challenges for asean MOHAMED ARIFF. Sluggish growth in major industrial economies. Steady growth expected in developing Asia. Southeast Asia pales somewhat. Domestic demand plays an important role. Intraregional trade is on the rise. Exports to developing Asia.

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intraregional trade is on the rise
Intraregional trade is on the rise

Exports to developing Asia

mounting inflationary pressures
Mounting inflationary pressures

Inflationrates, latest month

2010 average: 4.4%

2009 average: 1.2%

greater volatility is expected
Greater volatility is expected
  • Two competing forces:
    • Lure of ASEAN’s strong fundamentals
    • Reduction in investors’ risk appetite due to uncertainty in the global environment

Policy makers need to prepare for more volatile capital flows

risks to the global economy
Risks to the global economy
  • Sovereign debt burden
  • Sedated US economy
  • The Eurozone at the brink of a recession
  • Economic stagnation in Japan
  • Deceleration of growth in China and India
  • No immunity for East Asia
  • The world economy to cave in?
  • Can China save the world economy?
post 2015 scenario
Post-2015 Scenario
  • The global economy settling in at a new equilibrium after rebalancing
  • The US to regain its clout as economic powerhouse, albeit on a subdued level, as it will save more and spend less
  • Intra-regional trade to gain greater prominence for ASEAN in the face of slower extra-regional export growth
  • Domestic and regional demand to be the main driver of economic growth for ASEAN
risks to economic growth warrant regional solutions
Risks to economic growth warrant regional solutions
  • Rebalance growth
  • Make growth more inclusive
  • Seek resilience through market integration
  • Strengthen monetary cooperation
  • Go for greater fiscal coordination
  • Pursue open regionalism
  • Stay competitive in the global arena
global competitiveness asean
Global Competitiveness: ASEAN

GCI 2010/11 GCI 2011/12

Rank Score Rank Score

Singapore 3 5.48 2 5.63

Malaysia 26 4.88 21 5.08

Brunei 28 4.75 28 4.78

Thailand 38 4.51 39 4.52

Indonesia 44 4.43 46 4.38

Vietnam 59 4.27 65 4.24

Philippines 85 3.96 75 4.08

Cambodia 109 3.63 97 3.85

Source: The Global Competitiveness Report

asean labor productivity growth
ASEAN: Labor Productivity Growth (%)

2009 2010 2011

Cambodia -0.90 4.66 4.40

Indonesia 2.26 2.83 5.37

Malaysia -3.78 4.96 3.31

Myanmar 6.36 8.54 3.83

Philippines -1.66 4.73 2.29

Singapore -2.40 9.16 2.76

Thailand -4.12 6.87 2.69

Vietnam 2.49 3.94 3.98

Source: Malaysia Productivity Corporation (MPC)

asean total factor productivity growth
ASEAN Total Factor Productivity Growth (%)

20062007 2008 2009

Cambodia 11.55 4.26 1.03 -3.99

Indonesia 1.29 0.52 0.90 -0.36

Malaysia 2.33 2.58 1.64 -4.93

Philippines 2.46 3.33 0.99 -2.45

Singapore 0.37 3.01 -6.50 -3.66

Thailand 1.55 1.40 -1.16 -5.47

Vietnam 0.38 0.21 -1.86 -2.28

Source: Malaysia Productivity Corporation (MPC)

key messages
Key Messages
  • The global economy to experience slower growth, as the US and EU economies rebalance.
  • Inflation to decelerate
  • To adjust to the sluggish global economy, ASEAN must accelerate structural reforms
  • To be globally competitive, ASEAN must close rank and act as a single entity
  • ASEAN must take advantage of its youthful population while preparing for demographic transitions over the medium term