How Will the ASEAN Economy Develop in 2018？

Wang Qin

Stable growth over the past few years indicates a bright future for ASEAN economies.

The year 2017 marked the 50th anniversary of the establishment of ASEAN. It was also a year in which the growth rates of ASEAN economies generally accelerated. The region has become one of the hot spots of the global economy. Although the global economy as a whole maintains the momentum of recovery， it is still undergoing profound adjustment. This author believes that in 2018， ASEAN economies will grow at a slightly higher rate than last year. Most of the economies will sustain a medium-high rate of growth. But uncertainties in the regions economic growth continue to exist. I am cautiously optimistic about the prospects for the regions mid-term development for the following reasons：

First， against the backdrop of sluggish global economic recovery， ASEAN economies have gradually stabilized， maintaining a medium rate of growth. In 2016， the Indonesian economy grew at 5.02 percent， the Malaysian economy grew at 4.2 percent， the Philippine economy grew at 6.9 percent， the Singaporean economy grew at 2 percent， the Thai economy grew at 3.2 percent and the Vietnamese economy grew at 6.21 percent. In 2017， ASEAN economies sustained their growth， with most economies being expected to have grown faster than the previous year. The fundamentals of the Indonesian economy were sound. The Malaysian economy maintained robust growth. The Philippine economy remained eye-catching. The Singaporean economy grew at a higher rate than expected. The Thai economy achieved its best result in five years. The Vietnamese economy fully achieved the 13 economic targets set by the government.

Second， ASEAN economies have taken the initiative to adjust their development strategies， and formulated medium- and long-term economic development plans. To achieve the sustainable and stable development of their domestic economies， they have strengthened macroeconomic regulation and control， implemented structural adjustment， accelerated economic transformation and industrial upgrading and improved the investment environment.

For example， in February 2017， the National Economic and Development Authority （NEDA） of the Philippines formulated the Philippine Development Plan （PDP） 2017-2022. According to the plan， GDP growth is expected to strengthen further to 7-8 percent， per capita income is expected to increase to US$5，000， overall poverty incidence is expected to be reduced from 21.6 percent to 14 percent， poverty incidence in rural areas is expected to decline from 30 percent to 20 percent and the unemployment rate is expected to decline from 5.5 percent to 3-5 percent. In April 2017， the Philippine government launched a large-scale infrastructure investment plan to invest 8.4 trillion pesos （US$165 billion） on infrastructure construction within six years. The Philippine government predicts that the huge sum of infrastructure investment will effectively boost its domestic economic growth， allowing it to maintain an annual GDP growth rate of 7 percent in coming years， along with 1 million new jobs added each year.

Third， having experienced a long recovery period since the 2008 international financial crisis， the global economy witnessed its largest scale growth in nearly a decade. In 2018， the global economy will maintain its strong momentum of growth. Theres no doubt that this will also have a positive impact on ASEAN economies.

But it is noteworthy that the foundations of the worlds economic recovery remain precarious. The road to global economic recovery remains uneven. Commodity prices remain at a low level. The monetary policy and tax reform plan of the United States will increase international capital flows. Emerging market economies will come under double pressure. Geopolitical risks also add to the uncertainty of the global economy. Besides， some non-economic factors （such as the 2018 elections in Malaysia and Thailand） will also affect the prospects for national economies. Southeast Asian countries have entered the era of ASEAN Economic Community， but there is still a long way to go to truly realize the free flow of factors of production in the region.