The gross domestic product (GDP) growth of six ASEAN countries - Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam - will recover to 4.5% and 4.7% in 2024 and 2025, respectively, from 4% in 2023, according to Maybank Research Pte Ltd forecast.
In a report 'ASEAN Frontiers: The New Trailblazers', researchers from Maybank said the recovery in GDP growth will be driven by manufacturing and exports, particularly electronics, which are supporting a modest growth recovery in the first half of the year.
Maybank also said that artificial intelligence (AI), data centre boom, and broadening global electronics demand are brightening the trade and foreign direct investment (FDI) outlook.
Despite elevated interest rates, strengthening economic activities have resulted in loan growth picking up across ASEAN, Maybank said.
Visa waivers in Malaysia, Thailand and Singapore and a ramp-up in flight capacity are boosting Chinese tourists to ASEAN.
Commenting on ASEAN’s inflation rate, Maybank said this has fallen sharply from its highs in 2023 as supply chain disruptions from the Russia-Ukraine crisis.
ASEAN central banks are however constrained from trimming policy rates, as a resilient US economy and ‘higher for longer’ US interest rates have increased pressures on emerging market currencies.
According to Maybank, it is expected that the US Federal Reserve will cut the funds rate by only 50 basis points in 2024, starting from September.
Maybank also noted that ASEAN has emerged as one of the preferred destinations as multinational companies (MNCs) diversify their manufacturing supply chains away from China.
FDI approvals and applications to several ASEAN countries including Malaysia, Thailand, Vietnam and Indonesia, have risen sharply.
Meanwhile, private investment has strengthened in the first quarter of this year in Malaysia, Vietnam, Thailand and Indonesia, suggesting that the recent surge in FDI pledges is materialising.
ASEAN countries are securing investments not only from the US and its allies, but also from China, as the country’s FDI has increased strongly in Vietnam, Thailand and Malaysia since the reopening.
Malaysia appears to be drawing the biggest investments in data centres as AI spurs an investment boom in this sector across ASEAN. It has drawn investments from Google, Nvidia, GDS and Equinix while Thailand has secured investments from Amazon, Microsoft and Google.
Meanwhile, Indonesia has attracted Amazon, Alibaba and Edgnex, among others and Vietnam’s nascent market has received commitments from the likes of Keppel, Alibaba and Gaw Capital./
