KUCHING: The key to economic success for the Association of South East Asian Nations (Asean) is to shift focus from the export market to domestic demand.
According to a report ‘Economic Insight: South East Asia’ from the Institute of Chartered Accountants of England and Wales (ICAEW), an increasingly skilled workforce in South East Asia (SEA) has seen its productivity rise, turning manufacturing nations into important consumer markets.
“The emergence of middle classes that start to accumulate assets as they join the global consumer society will be of long term benefit to the buyers of these countries’ commodities and manufactured products,” the report stated.
This, however, was a long-term perspective and in the meantime, exports provide an essential foundation for economic success.
The report stated that although the economic centres of the world was shifting to the East, North America and the European Union (EU) remained as the world’s biggest economies.
China has established itself firmly in third place and due to that, has fronted the global growth that has been so robust in recent years.
The US and the EU both facing economic problems of their own, Asia too has a host of economic issues to deal with.
“Japan’s budgetary situation is similar to that of the US, prompting the country to start weaning itself off a public debt addiction. India is struggling to revitalise its economy after a sudden drop in gross domestic product (GDP) and to restart stalled reforms.
“China has to overcome internal division in the communist party, announcing a new set of leaders that will struggle to change the country’s economic model from reliance on asset accumulation to a more balanced mix of public, household and business spending,” stated the report.
Despite having a growing domestic demand that would help bolster the impact of the global economic turbulence, the export market still remains an important facet in regional growth.
With the regional GDP expected to be expanding at an annual rate of 7.4 per cent, the stagnation of import values globally means that SEA cannot count on its huge neighbours to boost exports and thus economic growth.