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