Singapore is likely to benefit from Indonesia’s strong domestic growth through increased tourism, but economic growth in the country is expected to remain relatively weak, according to a new ICAEW report.
The ICAEW report Economic Insight: South East Asia is produced by Cebr, ICAEW’s partner and forecaster. Commissioned by ICAEW, the report provides its 140,000 members with a current snapshot of the region’s economic performance. The report undertakes a quarterly review of South East Asian economies, with a focus on the five largest countries; Indonesia, Malaysia, the Philippines, Singapore and Thailand.
According to the report, the increased integration of the region has also led to more intra-regional travel. Between 2007 and 2011, tourist arrivals from outside the region grew by 28.6% while intra-regional travel grew by 34.5%. Singapore and Malaysia together accounted for nearly two-thirds of intra-ASEAN travels in 2011, with most trips being of short duration and between the two countries.
The appeal of each country to its regional neighbours varies, however, with the Philippines only receiving 8% of visitors from the region while 80% of visitors to Laos came from ASEAN.
Singapore’s economy is expected to grow by about 2.6% in 2013 but a rise in world trade, combined with benefits from the free trade agreement with the EU, suggests the country could see growth of about 3.4% in 2014.
ICAEW Economic Advisor and Cebr’s Chief Executive, Douglas McWilliams, said: “The global economy as a whole remains unstable, but ASEAN nations find themselves in an ‘economic sweet spot’ of manageable inflation, moderate interest rates, and rising prosperity feeding through to increasing household consumption.”
“One success story for the region is tourism; a major industry for South East Asia, which is renowned for its rich history and natural beauty. Tourism is not just a major employer but also provides substantial foreign currency earnings, so the rise is a boost to the region’s economies. A big boost has come from intra-regional travel, including business travel, which has grown by over a third in the last four years, supporting significant economic development. Based on the current numbers, and barring extraordinary setbacks, we would expect to see ASEAN continue to outpace the global economy for the foreseeable future.”
The region has now overtaken Japan as the third largest customer of China. Though exports to Europe have fallen, sales to ASEAN inflows have risen to a point where it more than compensates for this.Mark Billington, Regional Director, ICAEW South East Asia, said: “As ASEAN economies continue to grow, they are beginning to play a larger and more pivotal role in the global economy and marketplace. With the increased purchasing power from a rapidly growing middle class, the region will become one of the most dynamic parts of the world.”