Asean on track to become world’s fourth largest economy by 2030

Asean on track to become world’s fourth largest economy by 2030

08 Aug 2024

Asean is on a positive trajectory to emerge as the world’s fourth-largest economy by 2030 from its current fifth, given its progressive and significant macroeconomic environment.

Asean Economic Community (AEC) Deputy Secretary-General Satvinder Singh said this includes its gross domestic product (GDP) which soared 51 per cent to US$3.8 trillion last year versus US$2.5 trillion (US$1=RM4.47) in 2015.

This was further reinforced by regional trade which rose to US$3.5 trillion in 2023 from US$2.3 trillion in 2015, which helped raise per capita income significantly.

This reflects Asean’s persistent commitment to becoming an open economic region for global trade and investment, which has improved significantly, he said in his keynote address at a conference “Vision 2045: Age of Asean” organised by the Investment, Trade and Industry Ministry (MITI) on Tuesday and co-hosted by the Asean Business Advisory Council and Boston Consulting Group.

“What’s important is, we are one of the very few regions in the world where our trade is almost as large as our GDP (and) the biggest component of trade is not our trade with China or the United States, but our intraAsian trade, which is somewhere close to US$800 trillion.

“What we are trying to say is, as much as we have grown as the largest trade component, we have also grown a lot in terms of our trade with the rest of the world,” he said.

This is the uniqueness of economies within the Asean bloc, unlike the European Union or the North American Free Trade Area where “they like to trade with each other.”

For Canada, Mexico and the European Union (EU), most of the countries trade with each other and not with the rest of the world.

“So, this is the uniqueness of Asean. We are strong in Asia, and at the same time, we are (also) strong globally trading in goods and services,” he said.

Satvinder said in the global south, Asean is also the largest recipient of foreign direct investments totalling about US$230 billion to-date.

He said the global supply chain of companies with low carbon footprints and high-value activities is more likely to be in Asean countries in the coming years.

Some of the sectors to see significant growth include semiconductors, agriculture, data equipment as well as minerals and the metals industries.

Besides this, “the sweet spot for Asean is technology transformation and that frontier technologies such as 5G, artificial intelligence, Internet of Things, are going to create another US$8 trillion,” he said.

Nonetheless, Asean should work hard to reduce the cost of technology across their economies and ensure regional economies have access to technological devices and solutions.

Despite these economic positives, Satvinder expressed concern that the region’s young workers are expected to decrease while ageing workers are estimated to increase marginally, presenting the risk of skills mismatch.

Across member countries, automation will also affect the different types of occupations.

“Therefore, reskilling young workers in technology and innovation through technology management hubs, online education platforms for science, technology and innovation and upskilling the elderly, will instil productivity and help strategic industries to move up,” he said.

Source: Bernama