Southeast Asia Outlook 2023

A REOPENING BOOST I M PAC T O F C H I NA’ S R EO P E N I N G

Southeast Asia (SEA) is expected to be one of the leading sources of growth for the global economy as the United States and Europe tiptoe around a potential recession. SEA is expected to grow by 4.7% yoy in 2023, close to pre-pandemic average growth rates of about 5% annually.

GROSS DOMESTIC PRODUCT (GDP)

The pace of economic growth differs across SEA, depending on their economic structure and stage of reopening. The Philippines and Vietnam’s economies are expected to lead growth in 2023, with growth at 7.1% and 5.8% respectively. The Philippines economy would be aided by tourism recovery and a sustained growth in its Business Process Outsourcing industry which tends to do well during the economic downturn. Vietnam continues to benefit from trade diversification trends though export growth is showing signs of tempering off due to a global slowdown. Thailand is the only ASEAN economy that would see stronger GDP growth in 2023, compared to 2022, amidst an expected strong tourism uplift as China reopens. Pre-pandemic, Chinese visitors to Thailand contributed to over a third of the total Chinese visitors to SEA. The Singapore and Malaysia economies would cool off after a strong economic rebound in 2021 and 2022. Similarly, the Purchasing Managers’ Index (PMI) paints a mixed picture across SEA economies, with dimmer manufacturers confidence in trade-oriented economies. Singapore (26%), Vietnam (24%) and Malaysia (17%) collectively drove about 67% of

outside-of-SEA exports, based on 2021 trade data. The rising adoption of electronic vehicles bodes well for manufacturers in Indonesia and Thailand is an automotive hub and well-positioned to tap on EV production trends. While Indonesia has seen higher planned investments into both mining and downstream industries due to its large reserves of Nickel, a key metal for EV batteries. The reopening of China would be a catalyst for SEA economies given China is a key export destination for SEA. Higher consumption demand out of China would bode well for commercial, industrial and residential investments in the region. Hotel and retail assets could see the strongest uplift in the near term.

Source: Moody’s Analytics, Cushman & Wakefield Research

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