Underestimating the economic power of ASEAN would be a mistake (The Nation, 30 March 2016)

Underestimating the economic power of ASEAN would be a mistake (The Nation, 30 March 2016)

To underestimate the region, however, would be a mistake. The GDP of its ten members now totals more than $2.5 trillion – about 25 per cent more than India’s. If ASEAN were one economy, and current growth trends continue, it could be the world’s fourth-largest economy by 2050. Rising affluence means the number of middle-class households will top 120 million by 2025, roughly double the 2010 number. The question is: How can the region turn impressive projections into a future reality? Boosting intra-regional trade is one sure way of spreading wealth. Intra-ASEAN trade accounts for approximately 25 per cent of Southeast Asia’s total, compared to 50 per cent in the EU. To help address this shortfall in potential, ASEAN’s member countries have formed the ASEAN Economic Community (AEC), which aims to liberalise the flow of goods, services, capital, and ultimately, skilled labour across the region. If fully implemented, the extra steps envisaged under the AEC could raise ASEAN’S GDP by 5 per cent by 2030 – a welcome development for countries like Thailand following subdued growth and currency volatility in 2015. The opening up of services across the region under the AEC framework will be of particular interest to Thailand. ASEAN’s intra-regional flow of services has lagged that of goods – a paradox given the service sector’s importance to most ASEAN economies, including Thailand, where it accounts for just over 50 per cent of GDP.