Asia prospects are positive despite western stagnation

We hear a lot about the economic trials and tribulations in North America and Europe, and the expectations around a recession as national central banks continue to raise interest rates. There is less reported about what is happening in Asia except for China, and that data is less than reliable.

Visiting Singapore, however, provides a more optimistic outlook for 2023 and the coming two years, notwithstanding the fiscal pressures from the high interest rates in the Western Hemisphere. In the first half of this year the ASEAN economies could not avoid these pressures and as a result there is consensus that 2023 economic growth will be down compared to 2022 but nevertheless it will remain robust and most likely have stronger growth than its regional neighbors and the major global players.

The Asian Development Bank is projecting 4.7 per cent growth for the 10 economies that make up ASEAN with this accelerating to five per cent in 2024. This is being borne out by the expected strengthening of economic activity in the second half of this year that is already becoming apparent. Part of this is due to foreign direct investment (FDI) shifting from China to Southeast Asia looking for political and economic stability. Added to this, Chinese companies are also growing their foreign investments.

Another factor is the trend of increased investment in technological and digital industries and initiatives, supported by the governments looking for an edge in transitioning from the older manufacturing industries which had come in search of cheaper labour. As the globalisation of manufactured goods focused on China is coming to the end of an era of expansion, following the supply chain problems and political issues dominating Western national politics, the reduction in the reliance on China is strongly benefiting Southeast Asia as infrastructure improves and economic policies are more favourable towards FDI investments and ownership.

This trend is reflected in the maritime sector as more investment is flowing into new port developments together with improved highway connectivity in countries such as Vietnam, Cambodia, Thailand and Indonesia. The shift of container capacity to the North-South Asia regional trades lanes has been very noticeable and to the benefit of associated ports and terminals.