03/09/2023 – Robust domestic demand will help Emerging Asian economies to cope with external headwinds. They are projected to grow by 5,3% on average in 2023 and by 5,5% in 2024. For the member countries of the Association of Southeast Asian Nations (ASEAN), real GDP growth is forecast to weaken to 4,2% in 2023 and grow by 4,7% in 2024.
The OECD Economic Outlook for Southeast Asia, China and India 2023-Update: Resilience Under Uncertainty, updates the March 2023 version with new data and information. Released today at the ASEAN Business Investment Summit, in Jakarta, the report finds that robust private consumption and the steady expansion of the services sector will continue to drive economic growth in many ASEAN economies, despite the contraction of 10% in annual export growth experienced in the second quarter of 2023 that follows the slowdown in external demand.
Sustained economic growth and an expanding middle-class will contribute to Emerging Asia’s steady rise as a source of final export demand. Tourism has served as a major contributor to growth and employment creation, and continued adaption to new travel preferences will help to sustain its growth for the region. Steady inflows of foreign direct investment will continue to support the expansion of merchandise and services exports, together with governments’ efforts to strengthen and diversify the region’s export base through policy reforms and infrastructure development.
Consumer price index (CPI) inflation is expected to stabilise in 2023, but elevated core inflation will pose a challenge in the region. Despite headline inflation declining, core inflation persists in areas such as clothing, healthcare, education, and household goods. Financial markets in Emerging Asia remain relatively stable in general, with positive sentiment, supported by cautious monetary policies. Equity markets experienced fluctuations but are expected to maintain a positive outlook, driven by emerging sectors, particularly in the services industry, such as e-commerce, and information and communication technologies (ICT).
Although capital outflow and portfolio investment outflows weakened local currencies in some economies last year, currency values in the region are recovering as appropriate monetary policies work their way into the economy. Emerging Asia’s financial markets could remain vulnerable to global financial market volatility and the monetary policy stance in advanced economies. Timely and appropriate monetary policies will help to maintain the momentum of economic growth and tame inflationary pressures.
For further information on the 2023 Update of the Economic Outlook for Southeast Asia, China and India, please visit: www.oecd.org/dev/asia-pacific/economic-outlook.
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