Asean's economic growth rate for the next 10 years is about 4 to 5 percent
The Southeast Asian (SEA) economy is expected to grow at 4-5% per annum over the next decade, with Vietnam leading the way at a projected growth rate of 5-7%.
While many economists have rightly focused on pro-growth policies, stable macroeconomics, and healthy demographics in Southeast Asia (SE), they have often missed two additional key sources of growth: (1) The impact of technology entrepreneurs on investment, productivity and economic inclusion, and (2) Southeast Asia's largest trade relationship is with China - and as China grows, so does Southeast Asia.
This runs counter to the conventional wisdom that South-East Asia benefits most from diversifying away from China; Southeast Asia has benefited the most from the growing Chinese economy. Those are the conclusions of a new report by Bain & Company and Monk's Hill, a venture capital firm, titled "Southeast Asia's Quest for Emerging Market Growth: How Four Factors are driving Growth in Southeast Asia."
Charles Ormiston, founding partner of Bain & Company Southeast Asia, said: "Growth forecast is notoriously difficult, because there are numerous factors affect purely based on historical performance prediction, this report represents our sensible ideas for the future of southeast Asia, that is the way through strict to view your past performance, and combining with our business, economic, social and political change can affect growth potential in the field of judgment. We remain optimistic about continued growth in Southeast Asia in the face of global instability and believe it is likely to outperform other emerging regions of the world within the next decade."
Southeast Asia has experienced strong and steady growth since 1991, with per capita income increasing 2.5 times from US $1,900 to US $4,700 in 2020. Contributing factors include stable government policies, surging entrepreneurial activity, favourable demographics and a relatively benign international environment.
Asean's per capita GDP income has been rising and is likely to lead emerging market growth again, supported by four factors: strong traditional growth policies; A vibrant ecosystem of tech disruptors (TED); Attractive demographics and a growing working and middle class; And to take a neutral stance in geopolitical turmoil.
The study's growth forecast for Southeast Asia predicts a slight uptick in growth for all major Southeast Asian countries except Thailand, which should be interpreted as a "positive outlook" relative to the growth headwinds facing Europe, Japan, China and emerging regions such as Latin America and Eastern Europe.
In the report, Bain notes that ASEAN countries have made steady progress in improving several of the seven traditional growth drivers: improving the ease of doing business; Promote healthy competition; Promoting investment; Strengthen government and reduce corruption; Improving educational standards and promoting retraining; Improving infrastructure; We will strengthen macroeconomic and social stability.
Perhaps the most obvious improvement in the Southeast has been the remarkable increase in macroeconomic stability since the 1997 Asian crisis. This reduction in risk will benefit South-East Asia during the current global headwinds.
A technology-driven disruptor
Today, the biggest force for progress in most developing countries is the technology-driven disruptor or TED. TED directly and indirectly impacts six of the seven traditional growth drivers by facilitating business creation, enabling healthy competition, increasing investment, enhancing e-government, improving education and productivity levels, and improving infrastructure.
Pressure from TED has forced traditional family-controlled or "national champions" to raise investment levels and accelerate innovation, or face extinction over the next decade.
The full report analyzes four industries -- aviation, finance, logistics, and super applications, highlighting the disruptive impact of TED and how they will contribute to higher growth rates in the region.
Attractive demographics
One advantage of Asean is that the size and expected growth of its working-age population yields a demographic dividend. China's population declined in 2022. Among the emerging regions examined, ASEAN has the largest group of children relative to the total population. Middle class consumerism is expected to rise as a younger population needs to spend on lifestyle, education, housing and other needs, and by the 2030s, middle class consumerism is expected to rise, while populations in Latin America and Eastern Europe will begin to contract.
To remain neutral
Asean has traditionally traded peacefully with various "great civilisations" - China, Arabia, Persia, India, Europe - while balancing their competing demands. The region can maintain this neutrality even in this complex geopolitical environment.
The region has also benefited from China's rise in two distinct ways: as the largest market for Asean trade and as an important source of foreign direct investment (FDI) as non-Chinese and Chinese companies diversify their supply chains or shift away from China.
"We had a very productive collaboration with Bain, who produced this report," said Peng T. Ong, co-founder and managing partner of Monk's Hill. Monk's Hill brings a wealth of experience working with the tech enablement disruptors highlighted in this report, as well as government policy implications