One of the world's areas with the fastest growth rates is Southeast Asia, also known as the ASEAN (Association of Southeast Asian Nations) region. The Asian Development Bank (ADB) projects that Southeast Asia's economy will expand by 5.5 percent in 2022.
However, a number of shifting and usually unfavorable economic pressures are causing the ADB to lower its region's growth forecast to 4.7 percent, mirroring global trends.
The International Monetary Fund (IMF) predicted that the world will grow by 3.2% in 2022 and 2.7% in 2023, which means that ASEAN will continue to develop much more quickly than the average for the world.
By 2030, the region is expected to have the largest single market in the entire globe. The financial flows, which have remained strong in recent years, are evidence of this. As barriers to intra- and inter-regional trade and investment have been gradually removed, ASEAN member states are becoming more open to global commerce.
What are the Southeast Asian countries' promising sectors for 2023?
An significant sector of the local economy is manufacturing. This reliance on manufacturing is more pronounced in some nations than others; in Vietnam, it serves as the engine of the economy, and in Thailand, it provided 27% of GDP in 2021.
However, there are a number of grounds to think that investment in the region's manufacturing will continue in 2023. One reason for this change is that products made in ASEAN are typically seen as being more affordable than those made in China, mainly because of factors like labor costs.
Due to the US-China trade war and lower labor costs, many manufacturers with operations in China have been compelled to relocate some or all of their supply chains to Southeast Asia.
The ASEAN governments have implemented enabling policies and preferential incentives to take advantage of this change in regional supply networks as part of the "China Plus One" or "China Plus Many" plan. This involves lowering taxes, making it easier to do business, increasing infrastructure expenditure, and providing incentives in free trade and special economic zone areas.
Vietnam has benefited greatly from the China Plus One strategy in recent years, with the manufacturing industry expected to bring in about 58 percent of all FDI in the nation by the year 2020.
With roughly 40 million visitors, Thailand was the most visited ASEAN nation in 2019. With its Phuket Sandbox initiative, it was the first nation in the Asia Pacific to start the reopening to foreign tourism in July 2021. The data for 2022 has not yet been finalized, but visitor numbers are still considerably lower than they were before the pandemic. According to estimates, 10 million tourists will travel to Thailand in 2022.
The tourist industry in Vietnam has also been having trouble. 2022 will likely see the entrance of 3.5 million tourists, just 18% of the 19 million foreign visitors in 2019.
The digital nomad visa program in Malaysia and the second residence visa program in Indonesia are two examples of programs that ASEAN nations have created to entice foreigners to their countries. 7.4 million international tourists, nearly twice as many as in 2022, are Indonesia's ambitious goal for 2023.
According to a report from Google, Temasek, and Bain & Company, the digital economy in the "ASEAN-6" (Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam) is predicted to achieve a gross merchandise value (GMV) of US$200 billion by the end of 2022. By 2025, this is anticipated to have a GMV of US$330 billion.
100 million additional internet users have emerged in the region over the last three years. The pandemic accelerated the adoption of the internet in many nations because it restricted public interaction and offline activities like shopping and leisure.
The thriving start-up environment in Southeast Asia is well-represented by tech start-ups. In ASEAN, the number of startups that have received more than US$1 million in funding nearly tripled to 1,920 between 2015 and 2021, according to a recent UNCTAD report. The development rate is 85% higher than that of Europe and 65% quicker than that of the US.