By Dr. Wilson Chew
Global growth outlook continues to be uncertain in 2023.
Changes in international economic conditions have led to a new era of rising costs,
underscoring the need for Singapore and its local enterprises to become more competitive.
Southeast Asia stands out as a bright spot amid global economic uncertainty.
ASEAN’s positive growth momentum can be the tide that lifts all boats,
especially forward-thinking SGEs.
Changes in international economic conditions have led to a new era of rising costs, underscoring the need for Singapore and its local enterprises to become more competitive.
The global growth outlook is projected to continue softening in 2023. In April, the International Monetary Fund (“IMF”) characterised the global economic outlook as “uncertain”, with “a rocky recovery”. The uncertain outlook continued from 2022, amid financial sector turmoil, high inflation, ongoing effects of the Russia-Ukraine war and the pandemic. Global gross domestic product (“GDP”) growth is projected to decelerate from 3.4 per cent in 2022 to 2.8 per cent in 2023, before settling at 3.0 per cent in 2024.
Despite the cloudy forecast, the picture looks somewhat different for ASEAN economies and for innovative Singapore global enterprises (“SGEs”).
ASEAN stands out as a bright spot amid heightened global economic uncertainty. Although the IMF projects the ASEAN-5’s GDP growth to slow from 5.7 per cent in 2022 to 4.6 per cent in 2023, these forecasts remain close to pre-pandemic trends, with growth supported by the resilience of manufacturing and the rebound in tourism.
First, the continued rise of ASEAN’s middle class will bolster consumption growth. Between 2019 and 2030, the World Economic Forum (“WEF”) projects ASEAN’s total consumption to more than double to nearly US$4 trillion, supported by the rise in the middle class. Within the region, the number of high and upper-income households is expected to increase by 27 million to 57 million by 2030. This continued growth in affluence could potentially expand the total market for SGEs.
Second, the pandemic has prompted a massive digital adoption spurt across ASEAN, in turn presenting huge opportunities. Since the pandemic began, around 60 million users have taken up consumer digital services, with the ASEAN-6’s internet economy projected to reach US$1 trillion in gross merchandise by 2030, up from just US$174 million in 2021, based on a study by Google, Temasek, and Bain & Company.
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Note: This article first appeared in The Business Times on 8 September 2022.
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