Southeast Asia Outlook 2024

Southeast Asia Outlook 2024: Opportunity Beckons

CUSHMAN & WAKEFIELD

SOUTHEAST ASIA TO RIDE ON GLOBAL MANUFACTURING RECOVERY MANUFACTURING RECOVERY

With the global economy on course for a soft landing, global manufacturing activity should pick up as consumer pent-up spending on services normalises back towards goods amidst lower inventory surpluses. This bodes well for SEA given that majority of exports (77% as of 2022) are from outside of SEA. The pace of recovery will depend on China, United States, Europe and Japan which drives about close to 50% of exports in SEA. That said, economic growth in the United States, Mainland China and Europe in 2024 are expected to moderate, suggesting a gradual rebound in SEA manufacturing exports.

Purchasing Managers’ Indices (PMI), a barometer of manufacturing activities, are largely showing signs of improvement. While not all PMI levels across the region are in positive territory, export-oriented countries such as Singapore, Vietnam and Malaysia have seen improvements in PMI readings over the last 6 months of 2023, suggesting improving momentum for

manufacturing and exports. Notably, Thailand PMI deteriorated in December 2023, driven by a contraction in manufacturing output and lower business confidence. That said, we anticipate a pick-up in manufacturing sentiments in Thailand in 2024, given continued investments in electronics and electric vehicle manufacturing.

MANUFACTURING ACTIVITIES SHOW SIGNS OF IMPROVEMENT

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SHARE OF ASEAN MERCHANDISE EXPORTS IN 2022

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0

-1

Mainland China 15 %

Intra-ASEAN 23 %

-2

-3

-4

-5

PURCHASING MANAGERS INDEX NET BALANCE (NEUTRAL = 0)

Indonesia

Philippines

Singapore

Vietnam

Malaysia

Thailand

United States 15 %

EU -27 9 %

JUN-23 DEC-23

Source: ASEAN Secretariat, ASEAN stats database, Trading Economics, Cushman & Wakefield Research

Other Partners 32 %

Japan 7 %

Source: ASEAN Secretariat, ASEAN stats database, Trading Economics, Cushman & Wakefield Research

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