Stronger exports, gov’t investments propel SEA’s economic growth

The growth momentum in Southeast Asia is largely attributed to government-led initiatives.

Southeast Asia’s economic growth forecast for 2024 has been revised to 4.7%, driven by increased public capital spending and stronger manufacturing exports, according to the Asian Development Outlook report.

The region’s manufacturing and trade sectors have benefitted from the global upturn in electronics and shifts in global supply chains, with high-income tech exporters, particularly those involved in semiconductors, seeing notable gains, the report said.

Countries like Malaysia, Thailand, Singapore, and Vietnam are seeing accelerated growth due to strong domestic demand, lower inflation, and continued government investment.

Vietnam is benefitting from higher foreign investment, whilst other economies, like Indonesia and the Philippines, are set to meet previous growth expectations. However, geopolitical tensions, trade disruptions, and severe weather events remain risks.

Indonesia’s growth forecast for 2024 remains unchanged at 5.0%, driven by solid private consumption, public infrastructure spending, and gradually improving investment.

The country’s economy grew by 5.0% in the third quarter of 2024, maintaining the same growth rate for the first three quarters of the year, in line with the September ADO forecast.

Key projects, including the development of a new capital city and toll roads, are driving growth.

Whilst net exports have contributed modestly, imports have risen faster in the third quarter, reflecting increased domestic activity.

Regional elections are also expected to provide additional support for growth in the fourth quarter. In response to economic conditions, Bank Indonesia lowered its policy rate by 25 basis points to 6.0% in September to support growth amid low risks to price stability.

Additionally, Vietnam’s growth forecast for 2024 has been revised upward to 6.4% from 6.0%, with a forecast of 6.6% for 2025, up from 6.2%.

The country’s strong trade performance, export-led manufacturing recovery, and ongoing fiscal stimulus measures have contributed to its economic growth, which reached 6.8% in the first three quarters of 2024.

The robust rebound in exports, particularly in manufacturing, is also expected to continue, supported by the resilient US economy.

Vietnam's government has also played a key role in sustaining growth through accelerated public investment and accommodative fiscal and monetary policies, which are expected to further stimulate domestic demand.

Whilst the country faced significant damage from Typhoon Yagi, swift government recovery efforts have helped mitigate the impact on growth.