The Philippines and Viet Nam are expected to lead the growth in the Association of Southeast Asian Nations (ASEAN) over the next four years.
The OECD Development Centre’s Economic Outlook for Southeast Asia forecasts that ASEAN growth is projected to average 4.6% in 2015 and 5.2% over 2016-2020. Private consumption will be a large contributor to overall growth.
Real growth in Emerging Asia is projected to average 6.5% for 2015 and 6.2% annually over 2016-20. Growth will continue to slow in China while remaining strong in India at one of the highest levels in the region.
To sustain this robust momentum, the region will need to weather China’s slowing growth, which will continue to affect the rest of the region’s growth prospects, the impacts of the monetary normalisation in the United States and slowing productivity growth, says the Outlook.
Enhancing regional ties can play a key role in maintaining the growth momentum, the report says, in a special chapter on the topic.
Emerging Asia – Southeast Asia, China and India – is set for robust – though more moderate than in recent years – growth over the medium term, according to the latest OECD report.
“The region remains exposed to domestic and external risks. To maintain the growth momentum, strengthening regional ties is imperative. Enhanced monitoring capacities through better indicators and peer learning can make the regional agenda more effective and help move towards a global ASEAN integration,” said OECD Deputy Secretary-General Rintaro Tamaki.
The scale and scope of coordination need to be maximised among nations, among regions and sub-regions. Equally important is integrating these ties at the global ASEAN level, which involves deepening cooperation with neighbouring economies.
According to the OECD Outlook, a strong network of relations at various levels is essential for sustainable growth, including by taking active steps to realise a single economic market.
Reducing the disparities that hinder sustainable and inclusive growth is critical: poverty persistence and the uneven state of infrastructure throughout the region impacts development. Countries in need of priority action include Cambodia, Lao PDR and Myanmar.
“Green growth as well as the private sector as drivers of growth stand to benefit tremendously from the integration agenda,” said OECD Development Centre Director Mario Pezzini.
Removing tariffs and non-economic barriers can promote integration and facilitate trade in demanded renewable energy. Hydropower from the Mekong River, for example, remains a promising source of future generating capacity to be exported throughout the region.
Similarly, with stronger economic integration, local businesses will have tangible opportunities to expand their operations beyond national borders and transform into regional players or ASEAN enterprises, says the OECD Outlook.
Formulating new development strategies for the region will require adopting a comprehensive package of reforms for small- and medium-enterprises, finance, infrastructure, labour market and environmental policy as well as in the agriculture, education, social security and tourism sectors, according to the Outlook’s country-specific structural policy notes.