Economic integration: the key to unlocking ASEAN’s export potential?
When discussing the state of the global economy, a key theme has been the slow-down in world trade growth in recent years. However, one part of the world is defying this trend—South East Asia.
In November, South East Asia will be at the front of the global economic stage, when both the Asia-Pacific Economic Cooperation (APEC) and the Association of South East Asian Nations (ASEAN) meet. Since its formation in 1967, ASEAN has facilitated several free trade agreements which have seen the region’s nations become increasingly integrated, as they work towards the free movement of goods and skilled labour.
In this edition, we have looked in more detail at the ASEAN nations, and how further economic integration could expand their intra-regional export market. Our analysis shows that:
- The region is well suited to export expansion, given its strong and consistent output growth and its vast working age population. Supporting this, our upcoming APEC survey to be released in November shows over 88% of ASEAN respondents were confident of revenue growth over the next 12 months.
- ASEAN intra-regional export volumes are on course to grow from $330 billion currently to $375 by 2025 (1.5% p/annum growth rate). If, for illustrative purposes, the implementation of ‘Blueprint 2025’ led to a 1pp increase in the growth rate, intra-ASEAN exports could reach $410 billion. Achieving growth of near this order is dependent upon further trade liberalisation.
We don’t expect this expansion to be uniform—as some of the less developed economies within the ASEAN bloc and those that are more specialised in services exports are better placed to grow their export share. To maximise their own trade volumes, ASEAN exporters could target these higher growth potential markets.
In our economic update, we present the results of our ‘nowcasting’ model for the US economy which was constructed using the same approach as for the UK GDP nowcasting model set out in our July UK Economic Outlook. For the US, we project GDP to expand by 2.2% this year, faster than the 1.5% growth registered last year but still relatively modest by pre-crisis standards.
Finally this month we have looked at the economics of natural disasters, which tragically have been all too frequent recently. Our analysis shows that such disasters do appear to be occurring more often on average since the late 1990s than in earlier decades, although their impact can sometimes be mitigated to a degree now by preventative measures such as better early warning systems.