Want to be in the loop?
subscribe to
our notification
Business News
ICAEW: ASEAN TO BE FASTEST-GROWING REGION GLOBALLY IN 2022, DESPITE NEW COVID-19 VARIANTS+
Growth across South-East Asian (ASEAN) economies contracted in the third quarter of 2021, because of the challenges of the Covid-19 Delta variant. However, ASEAN is expected to be the fastest-growing region in the world in 2022 with a growth forecast of 6.1%, as a result of high immunisation coverage and successful management of cases so far.
The forecast was recently presented by Sian Fenner, Lead Asia Economist at Oxford Economics, at an Economic Insight Forum held by chartered accountancy body ICAEW on 2 December 2021. At the forum, industry leaders and experts discussed South-East Asia’s economic outlook, with a focus on regional trade agreements and their impact on supply chains and business relations.
The forecast given at the event showed that recovery lagged for South-East Asian economies in Q3 2021, as countries battled a resurgence of cases due to the spread of the Delta variant. Tightened restrictions weighed heavily on consumer spending, while significant disruptions in production and weakened manufacturing hindered growth across the region. Vietnam recorded a 12% fall in manufacturing activity quarter-on-quarter, which contributed to a lower GDP forecast of 6.2% on the year, a record low for the region’s best performing economy during the pandemic. GDP in Malaysia, Philippines, Thailand, and Vietnam in Q3 2021 was 4% to 6% lower compared to pre-pandemic growth in Q4 2019 and was only marginally higher in Singapore.
Prospects for ASEAN in the year ahead are brighter, driven by easing restrictions and improved mobility as the pace of vaccinations steps up across the region. The lifting of restrictions and resumption of domestic tourism should also see a strong rebound in household spending and services in 2022.
Overall, South-East Asia’s GDP growth is expected to reach 6.1%. Malaysia, the Philippines, and Vietnam are expected to experience high growth in 2022, at more than 6%, double the pace achieved in 2021. Indonesia’s GDP is also expected to increase from 1.4% to 6.0%, a healthy growth after two years of falling below trend. In Singapore, GDP growth will be more muted at 3.8%.
A positive outlook for the region in 2022 but uncertainty abounds
The recovery of the tourism sector will likely be a partial one, as the uncertainty of new variants and increased costs associated with vaccine tests will continue to contribute to consumer hesitancy to travel. Sticking with its zero-Covid approach, China’s decision to keep outbound travel low will also dim the growth of the region’s tourism sectors.
The Omicron variant introduced an element of unpredictability, as there is currently little knowledge of the efficacy of current vaccines against it and what the health implications might be for the population. According to the forecast made at ICAEW’s event, the impact of the variant is expected to be acute but contained to Q1 2022. In the worst-case scenario where economies return to lockdowns, global GDP growth will drop from the current forecast of 4.5% to 2.3%. This would have a ripple effect on weaker export demand for ASEAN, which is projected to reduce growth from 6.1% to 4.3% in this scenario.
Supply chain disruptions to persist well in 2022
The ease of restrictions since August and relatively healthy world trade activities have contributed to the growth of ASEAN’s manufacturing Purchasing Managers Index (PMI). Capacity on major shipping routes between Asia, Europe and the United States has recovered to pre-shipping levels, up 6% during the first nine months of 2021.
Nonetheless, global demand has outstripped supply leading to delays in shipping, and economies will have to find a way to build their resilience to supply chain disruptions and tackle inflation. In addition, capacity at ports will remain tight as Asian manufacturers work through a backlog of orders and strive to meet global demand. While the worst may be over, a full easing in supply chain disruptions will not be possible before the second half of 2022.
Inflation on the rise in ASEAN
Inflation has been elevated for many Asian economies, driven by rising commodity prices and weather-related spikes in food security. It is expected to average about 2.8% across the region in 2022.
Source: VCCI
Related News
![Card image cap](/uploads/Logo/Cathay%20%281%29.jpg)
ONE-TIME OFFER: COMPLEMENTARY CATHAY PACIFIC LOUNGE PASS
Begin your trip on the right note in Cathay Pacific’s first-ever ferry lounge, located at Shenzhen’s Shekou Cruise home port. Situated at the end of the pier, the ferry lounge offers a breathtaking 270-degree view of the sea. You can immerse yourself in sheer luxury and revel in the panoramic beauty. Catch a glimpse of Hong Kong in the distance.
![Card image cap](/uploads/news/Industrial%20Zone.jpg)
VIỆT NAM TARGETS FULL MOBILE BROADBAND COVERAGE ON HIGHWAYS, INDUSTRIAL ZONES BY 2025
By 2025, Việt Nam aims to achieve one hundred per cent mobile broadband coverage on all national highways, expressways and railways under a plan to enhance the quality of Việt Nam’s mobile telecommunications network by 2025, which has been approved by the Ministry of Information and Communications (MIC).
![Card image cap](/uploads/news/Investment6.jpg)
VIETNAM ONE OF FASTEST-GROWING E-COMMERCE MARKETS IN SOUTHEAST ASIA
The report released on July 16 highlighted that the total GMV of Southeast Asia’s eight leading e-commerce platforms rose to $114.6 billion in 2023, up 15 per cent from 2022. The key drivers for the region's e-commerce GMV expansion in 2023 are Vietnam and Thailand, growing 52.9 per cent and 34.1 per cent on-year, respectively.
![Card image cap](/uploads/news/Security.jpg)
2025 PIVOTAL FOR STOCK MARKET UPGRADE EFFORT
The Ministry of Finance (MoF) is expected to soon publish the entire content of the draft circular amending and supplementing four circulars on transactions, registration, depository, and clearing, as well as operations of securities companies and information disclosure. This move, along with feedback and explanations, aims to meet the criteria for upgrading Vietnam’s stock market.
![Card image cap](/uploads/news/bn-01.jpg)
VIETNAM INTENSIFIES E-COMMERCE TAX SCRUTINY
The department plans to offer guidance for and hold direct dialogues with e-commerce taxpayers to ensure compliance. Efforts will also include updating the e-commerce database, conducting risk analysis, and leveraging artificial intelligence (AI) to manage data and issue alerts.
![Card image cap](/uploads/news/eco2.jpg)
FOOTWEAR EXPORTS SEEN REACHING US$27 BILLION THIS YEAR
This optimistic forecast reflects the industry’s efforts to expand and diversify its markets. Lefaso indicated that Vietnam’s footwear sector will concentrate on traditional markets like the U.S. and the European Union, alongside markets with free trade agreements to maximize opportunities.