ASEAN Anticipates Slower Economic Growth in 2016 Due to China and Brexit, According to Reuters

By Marius Zaharia

VIENTIANE (Reuters) – Economic growth in ASEAN countries is projected to decline to 4.5 percent in 2016, down from 4.7 percent the previous year, largely due to the slowdown in China and uncertainties surrounding Britain’s decision to exit the European Union, according to a statement from member states.

In a meeting held in Laos, which is currently chairing ASEAN, economic ministers expressed optimism that growth in the group’s $2.4 trillion economy would bounce back to 4.7 percent in the following year. This recovery is anticipated to be driven by robust private and public consumption, along with improved efficiency in infrastructure.

The statement highlighted the region’s exposure to ongoing moderation in China’s economy and uncertainties tied to the new relationship between the UK and the EU post-Brexit. Nonetheless, ASEAN remains dedicated to furthering economic integration.

Ministers reported significant progress in eliminating import duties, with 99.2 percent of tariffs removed in Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand, and 90.9 percent in Cambodia, Laos, Myanmar, and Vietnam.

Approximately a quarter of the group’s total trade, valued at $2.3 trillion, occurs within the region. China stands as ASEAN’s primary external trading partner, accounting for 15 percent, followed by Japan, the EU, and the United States.

The member countries also expressed their intent to standardize economic strategies, acknowledge each other’s professional qualifications, streamline customs processes, enhance intellectual property regulations, and bridge the development gap between less developed members—Cambodia, Laos, Vietnam, and Myanmar—and the more prosperous nations in the region.

Further initiatives were agreed upon to improve connectivity in transportation infrastructure and communications, facilitate electronic transactions, integrate industries for regional sourcing, and boost the private sector’s participation in the economy.

This drive towards closer economic integration within ASEAN is regarded as a significant advancement from its original focus on promoting peaceful regional relations.

A joint report released by AmCham Singapore and the U.S. Chamber of Commerce revealed that 53 percent of American companies believe ASEAN has gained importance in global revenue over the past two years, with about two-thirds anticipating its significance will continue to rise in the next two years.

Vietnam, Indonesia, and Myanmar emerged as the top choices for U.S. companies looking to expand in the region, while Singapore, Laos, and Brunei were deemed less favorable options.

The report also indicated that corruption, transparency, and good governance remain critical challenges for the region’s outlook.