Southeast Asia

Southeast Asia

Outlook

Outlook

2024—34

2024—34

Over the next decade, Southeast Asia should outpace China in GDP growth and foreign direct investment. This report deep dives into the economic outcomes of the top six economies in the region, presents a forecast for the 10 years, and opportunities to accelerate that growth.

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Southeast Asia Outlook 2024-2034

Key Insights

Southeast Asia Outlook 2024-2034

Key Insights

1

Over the last 30 years, Southeast Asia has underachieved its potential. However, the seed of resurgence have been sown. Over the next decade, Southeast Asia will likely grow faster than the last decade, with higher GDP growth than China

1

Over the last 30 years, Southeast Asia has underachieved its potential. However, the seed of resurgence have been sown. Over the next decade, Southeast Asia will likely grow faster than the last decade, with higher GDP growth than China

2

The world has changed in fundamental ways; regional governments need to adjust

  • China manufacturing and innovation is now ultra-competitive and has driven premature de-industrialization of many developing countries

  • Low-cost labor, subsidized land, and tax holidays are no longer the main drivers of FDI

  • Climate change raises investment needs and changes priorities

  • Deep technology innovation is concentrating in the US and China; their rivalry is accelerating the pace of change

  • Developed economies are becoming more protectionist

2

The world has changed in fundamental ways; regional governments need to adjust

  • China manufacturing and innovation is now ultra-competitive and has driven premature de-industrialization of many developing countries

  • Low-cost labor, subsidized land, and tax holidays are no longer the main drivers of FDI

  • Climate change raises investment needs and changes priorities

  • Deep technology innovation is concentrating in the US and China; their rivalry is accelerating the pace of change

  • Developed economies are becoming more protectionist

3

Five “traditional” priorities stand out to raise Southeast Asia growth

  • Raise workforce skill levels/education (including foreign talent)

  • Increase physical and digital infrastructure spending

  • Attract more domestic and foreign investment

  • Raise competition in domestic markets

  • Strengthen government institutions

3

Five “traditional” priorities stand out to raise Southeast Asia growth

  • Raise workforce skill levels/education (including foreign talent)

  • Increase physical and digital infrastructure spending

  • Attract more domestic and foreign investment

  • Raise competition in domestic markets

  • Strengthen government institutions

4

Strategies to accelerate growth will require policy intervention include

  • Investing in emerging growth sectors

  • Fostering tech-enabled disruptors (TEDs)

  • Expanding capital markets’ breadth and depth

  • Accelerating green transition

  • Committing to growth-friendly multilateral initiatives

4

Strategies to accelerate growth will require policy intervention include

  • Investing in emerging growth sectors

  • Fostering tech-enabled disruptors (TEDs)

  • Expanding capital markets’ breadth and depth

  • Accelerating green transition

  • Committing to growth-friendly multilateral initiatives

5

Southeast Asia need not envision itself as a common market. Each country should commit to its own policy upgrades. Coordinated ASEAN initiatives can at most augment growth, but they cannot remedy country-specific fundamental weaknesses

5

Southeast Asia need not envision itself as a common market. Each country should commit to its own policy upgrades. Coordinated ASEAN initiatives can at most augment growth, but they cannot remedy country-specific fundamental weaknesses

Southeast Asia has enjoyed stable economic growth over the last 30 years, with Vietnam leading the region

Southeast Asia has enjoyed stable economic growth over the last 30 years, with Vietnam leading the region

Real GDP indexed to 1993
(1993–2023)

1995

1997 Asian

financial crisis

2000

2005

2008 Global

financial crisis

2010

2015

2020 Covid-19

crisis

2020

2023

12.5

10.0

7.5

5.0

2.5

0.0

Thailand

Indonesia

Philippines

Malaysia

Singapore

India

Vietnam

China

China

Vietnam

India

Singapore

Malaysia

Philippines

Indonesia

Thailand

2023 Real

GDP (USD B)

‘22–’23

Change (USD B)

‘93–’03

CAGR

‘03–’13

CAGR

‘13–’23

CAGR

‘93–’23

Multiple

Vietnam

420

~20

7.4%

9.0%

6.0%

8.7x

Singapore

501

~5

5.3%

6.7%

3.0%

4.3x

Malaysia

400

~14

5.4%

5.0%

4.0%

4.1x

Philippines

437

~23

3.9%

5.4%

4.7%

3.9x

Indonesia

1,371

~65

3.2%

5.7%

4.2%

3.6x

Thailand

515

~9

3.6%

4.0%

1.8%

2.5x

SEA-6

3,643

~138

4.1%

5.7%

3.9%

3.8x

China

17,795

~888

9.5%

9.5%

6.0%

11.0x

India

3,574

~231

6.1%

7.6%

5.7%

6.6x

Real GDP indexed to 1993
(1993–2023)

1995

1997 Asian

financial crisis

2000

2005

2008 Global

financial crisis

2010

2015

2020 Covid-19

crisis

2020

2023

12.5

10.0

7.5

5.0

2.5

0.0

Thailand

Indonesia

Philippines

Malaysia

Singapore

India

Vietnam

China

China

Vietnam

India

Singapore

Malaysia

Philippines

Indonesia

Thailand

2023 Real

GDP (USD B)

‘22–’23

Change (USD B)

‘93–’03

CAGR

‘03–’13

CAGR

‘13–’23

CAGR

‘93–’23

Multiple

VT

420

~20

7.4%

9.0%

6.0%

8.7x

SG

501

~5

5.3%

6.7%

3.0%

4.3x

MY

400

~14

5.4%

5.0%

4.0%

4.1x

PH

437

~23

3.9%

5.4%

4.7%

3.9x

ID

1,371

~65

3.2%

5.7%

4.2%

3.6x

TH

515

~9

3.6%

4.0%

1.8%

2.5x

SEA-6

3,643

~138

4.1%

5.7%

3.9%

3.8x

CH

17,795

~888

9.5%

9.5%

6.0%

11.0x

IN

3,574

~231

6.1%

7.6%

5.7%

6.6x

Understanding Southeast Asia Economic OUtcomes 1993-2023

The region's performance based on traditional growth drivers has been mixed, but sets the foundation for future growth

Understanding Southeast Asia Economic OUtcomes 1993-2023

The region's performance based on traditional growth drivers has been mixed, but sets the foundation for future growth

1
Growth drivers

Ease of Doing Business

1
Growth drivers

Ease of Doing Business

Indicator

Ease of Doing Business Score by World Bank (2020)

Unit

Score 0 – 100

70

ID

81

MY

63

PH

86

SG

80

TH

70

VN

Indicator

Ease of Doing Business Score by World Bank (2020)

Unit

Score 0 – 100

70

ID

81

MY

63

PH

86

SG

80

TH

70

VN

2
Growth drivers

Increase Competition

2
Growth drivers

Increase Competition

Indicator

Herfindahl-Hirschman Market Concentration Index (2021)

Unit

Score 0 – 1

0.09

ID

0.10

MY

0.10

PH

0.07

SG

0.07

TH

0.12

VN

Indicator

Herfindahl-Hirschman Market Concentration Index (2021)

Unit

Score 0 – 1

0.09

ID

0.10

MY

0.10

PH

0.07

SG

0.07

TH

0.12

VN

3
Growth drivers

Strengthen Institutions

3
Growth drivers

Strengthen Institutions

Indicator

Average of World Governance Indicator Scores by World Bank (2022)

Unit

-2.5 – 2.5

-0.1
-
+

ID

0.5
-
+

MY

-0.3
-
+

PH

1.9
-
+

SG

-0.1
-
+

TH

-0.1
-
+

VN

Indicator

Average of World Governance Indicator Scores by World Bank (2022)

Unit

-2.5 – 2.5

-0.1
-
+

ID

0.5
-
+

MY

-0.3
-
+

PH

1.9
-
+

SG

-0.1
-
+

TH

-0.1
-
+

VN

4
Growth drivers

Improve Workforce Quality and Availability

4
Growth drivers

Improve Workforce Quality and Availability

Indicator

Average Reading, Mathematics and Science PISA Scores (2022)

Unit

Score 0–600

369

ID

404

MY

353

PH

560

SG

394

TH

468

VN

Indicator

Average Reading, Mathematics and Science PISA Scores (2022)

Unit

Score 0–600

369

ID

404

MY

353