Southeast Asia Outlook 2023

PROMISING LONG TERM PROSPECTS A S T RON G D EC AD E A H E AD

Notwithstanding short-term challenges, SEA long-term

POPULATION AND GDP GROWTH

Both internal and external trade in SEA are poised to grow. Trade volumes in SEA has increased over the years, particularly in Vietnam whose trade goods have grown by 12.7% annually since 2012. Singapore could also see stronger future trade volumes, especially for high-value trade goods, in view of a record high fixed asset investments in 2022, particularly from the electronics sector. The ongoing diversification of supply chains from China is expected to continue albeit at a gradual pace. The institutionalisation of real estate in emerging SEA could accelerate as development policies, ease of doing business and government effectiveness improve, especially in Vietnam and Indonesia. Vietnam is a favoured market amongst investors and has seen rising investments from institutional investors. Indonesia and Philippines are markets with potential, though these markets remain relatively illiquid. Finally, sustainability is a rising opportunity in SEA as the major SEA economies set “green building” targets. The green building market could be worth US$20-25 billion by 2030, according to the Southeast Asia’s Green Economy 2022 Report.

Increasing urbanisation fuelled by digital transformation would create a huge market opportunity that would drive property demand in SEA. The digital economy in SEA is expected to grow by 20% annually from 2023 to 2025, according to a study by Google, Temasek and Bain & Company in 2022. SEA has also benefited from current global trade trends and geopolitical environment which has driven a diversification of supply chains and an expected increase in trade regionalisation. Recent trade agreements and frameworks would support further trade growth in SEA. For example, the Regional Comprehensive Economic Partnership (RCEP) would eliminate tariffs on more than 90% of goods over the next 10-15 years. The US-led Indo Pacific Economic Framework was announced in 2022 and could potentially drive higher trade for SEA. Trade-oriented economies such as Vietnam and Malaysia should benefit strongly. prospects looks promising. The SEA economy is huge and has the third largest population after China and India.

Source: Moody’s Analytics, Cushman & Wakefield Research Note: Size of bubble denotes Size of economy

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Southeast Asia Outlook 2023: Bouncing Back Stronger | 8