OECD: south-east Asian economic outlook to return to pre-crisis levels

South-east Asia's economic growth will return to a 'robust' pre-crisis average of 5.5% over the next five years, according to the South-East Asian Economic Outlook 2013 report
South-east Asia's economic growth will return to a "robust" pre-crisis average of 5.5% over the next five years, according to the OECD's latest forecasts.

The 10 economies of the Association of South-East Asian Nations (Asean) will show "resilience" to the predicted slowdown of China and India, the South-East Asian Economic Outlook 2013 report said.

The Paris-based thinktank forecasts China's economic growth will average 8.3% over the next five years, compared with 10.5% during the pre-crisis period from 2000-07. India's growth is forecast to slow to 6.4% from 7.1%.

The south-east Asian countries of Brunei, Burma (Myanmar), Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam will be insulated by a continuing shift to domestic demand, rather than exports, as the main driver of economic growth, the report said.

"Domestic demand growth, and particularly private consumption and investment, will be the main drivers of growth in most Asean countries. Growth will be less reliant on net exports than in the past. The expansion of the middle class is likely to continue to boost domestic demand," said
deputy secretary general Rintaro Tamaki.

The region's "remarkable" expansion of the middle class has boosted spending on education and health (see chart below), as well as durable goods such as cars and household appliances.
But the report urged progress on reducing social and economic differences between Asean nations.

As the graph below shows, huge disparities in GDP per capita exist in the region – with faster rises in the Asean-6 group of Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand than in Cambodia, Laos, Myanmar and Vietnam (CLMV).

Vietnam has been the most successful CLMV country in closing the gap with its wealthier neighbours and reducing domestic disparities, although inflation is a concern. Cambodia has been slow in catching up – but has managed to reduce income inequality at home. Laos has caught up quickly but at the cost of widening domestic disparities.
"Development gaps go beyond income levels. They encompass several dimensions of life including infrastructure, tourism, trade and investment, information and communication technology, human resources, and poverty. In particular, disparities are at their widest in poverty and human resource development and greater efforts are required in those areas," said Kensuke Tanaka, head of the Asia desk at the OECD's Development Centre

Sourced: guardian