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Hanoi, 14/06/2016 - Despite sluggish global growth, the economies of Southeast Asia, China and India are expected to continue to grow although at a more moderate pace in the near-term. Real GDP growth in Emerging Asia is projected to remain solid at 6.4% in 2016 and 6.3% in 2017, according to the latest Update of the Economic Outlook for Southeast Asia, China and India 2016 released by the OECD Development Centre today.

Real economic activity in Southeast Asia (ASEAN 10) is projected to grow at an average rate of 4.9% in 2016. India’s economy is expected to grow at 7.4%, while China’s growth is projected at 6.5% in 2016 as a result of the country’s economic ongoing process of rebalancing. Domestic demand is generally the main driver of economic growth in this region, says the Update.

The less favourable external environment is a potential risk to countries in Southeast Asia as well as to China and India. The region is facing challenges due to weak growth prospects from OECD economies, China’s slowdown and recent financial volatility in emerging markets. Export growth is weak. Climate shocks, including the effects of drought due to the El Niño phenomenon, are affecting agricultural production in the region.

The year 2016 is an important milestone for regional integration in Emerging Asia following the establishment of the ASEAN Economic Community (AEC) in December 2015. The AEC Blueprint 2025, which was recently launched, highlights strategic measures for the community from 2016-25. It encourages further trade through reduced or eliminated regulatory barriers and deeper connectivity. The ASEAN Trade in Services Agreement (ATISA) will be created as a legal instrument to support ongoing efforts to liberalise the service sector. Additionally, ASEAN is taking important steps to establish the region as a single investment market and to improve competition policy and law. To date, progress in implementing competition and consumer protection policies has been uneven among member countries.

Countries differ in their policy focuses in ASEAN due to both internal and external challenges. Indonesia and Thailand, for example, are investing in rural development and education to reduce inequality and to boost investment. Viet Nam continues to reform its state-owned enterprises. Malaysia and Singapore are strengthening their SMEs. The Philippines is focusing on creating more jobs and pushing regulatory reforms to attract foreign direct investment (FDI). Cambodia has announced new strategies to promote agricultural development and tourism. Lao PDR continues to develop its energy sector to increase electricity exports. Myanmar is developing new investment rules to attract more FDI. Amidst slow growth in China, challenges related to excess capacity remain and environmental risks need to be addressed. In India, on the other hand, increases in funding for higher education and improving financial literacy are priorities, according to the Update’s country-specific structural policy notes.

The biannual Economic Outlook for Southeast Asia, China and India contributes to the OECD Southeast Asia Regional Programme that aims to foster the exchange of good practices and mutual learning among policy makers in OECD and ASEAN countries.

Click here for the full 2016 Update or for the Executive Summary.

For more information on the Update of the Economic Outlook for Southeast Asia, China and India 2016, with country-specific focuses, visit: http://www.oecd.org/dev/asia-pacific/

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For further information

Kensuke.Tanaka@oecd.org, Head of Asia Desk, OECD Development Centre; Tel: +336 2719 05 19.

  

 

Table 1: Real GDP growth of Emerging Asia (Annual percentage change)

 

Source: OECD Development Centre

Note: The cut-off date of data is 1 June 2016. Weighted averages are used for the ASEAN average and Emerging Asia average. The results of China, India and Indonesia, including projections for 2016 and 2017, are based on the OECD Economic Outlook No 99.