A new report from the ASEAN+3 Macroeconomic Research Office (AMRO) paints a cautiously optimistic picture for the region’s economic future, albeit tempered by potential headwinds. Released on Monday, April 8th, the latest economic outlook forecasts that the ASEAN+3 region (comprising the ten ASEAN member states plus China, Japan, and South Korea) is projected to achieve a robust economic growth rate of 4.5% in 2024. This represents a modest yet significant acceleration compared to the 4.3% growth recorded in the previous year, 2023, suggesting a solidifying recovery trend. Looking slightly further ahead, the report projects a growth rate of 4.2% for 2025, indicating a steady, albeit slightly moderated, expansion trajectory.
According to AMRO’s analysis, the primary engine driving the projected growth in 2024 is expected to be robust domestic demand across the ASEAN+3 economies. This internal strength is notably underpinned by positive developments such as rising household incomes, which are anticipated to fuel consumer spending, and a discernible recovery in investment activities throughout the region. Adding to this positive momentum, the report identifies crucial “additional tailwinds” that are set to contribute to the favorable outlook. These include an anticipated cyclical upturn in the global semiconductor (chip) industry, a sector critical for many economies in the region and expected to boost their crucial technology exports, as well as the continued and steady recovery of the tourism sector, which is bringing in vital revenue and supporting a wide range of service industries impacted by the pandemic.
However, despite the positive headline figures and supporting drivers, AMRO issues a crucial warning, urging that this projected growth should not be taken for granted. The report emphasizes that the growth trajectory of the ASEAN+3 region, like any open economic bloc, remains inherently susceptible to disruption from multiple external and internal factors that could rapidly alter the landscape. AMRO Chief Economist Hoe Ee Khor underscored this point during the report’s release, highlighting several specific potential pitfalls that could significantly challenge the regional outlook.
Mr. Khor specifically cautioned that sudden spikes in global commodity prices, a scenario where China’s economic growth falls significantly below expectations, or an escalation in geopolitical tensions anywhere in the world, could collectively or individually reverse this otherwise positive trend for the region. A sharp rise in commodity prices could fuel inflation and increase import costs; weaker-than-expected growth in China, a major trading partner and source of demand, could dampen regional export prospects; and heightened geopolitical tensions can disrupt trade routes, deter investment, and create overall economic uncertainty. These factors introduce external volatility that the region must navigate carefully.
The report provides more granular forecasts for key economies within the bloc. It predicts that China’s economy is set to expand by a notable 5.3% this year, a figure that slightly exceeds the Chinese government’s official target of around 5%. For 2025, China’s growth is expected to moderate slightly to 4.9%. Within the broader ASEAN region itself, growth is projected at a strong 4.9% in 2025, with Vietnam and Indonesia identified as the fastest-growing economies within the group at projected rates of 6.5% and 5.2% respectively, reflecting their dynamic domestic markets and export potential.
Yet, even with these encouraging growth forecasts, Chief Economist Hoe Ee Khor pointed out during the report’s press conference on Monday, April 8th, that the ASEAN+3 region’s economic growth still lags behind the levels seen prior to the COVID-19 pandemic, indicating that the recovery is not yet complete or fully robust. A particularly weak area identified is the recovery in capital formation – the rate at which economies are investing in physical capital like infrastructure, machinery, and buildings. Mr. Khor stressed that this tepid recovery in investment is a significant constraint on future productivity and growth potential. To revitalize growth and ensure its sustainability and resilience in the face of future shocks, he asserted, “it is imperative to promote investment and adopt technology to enhance productivity and resilience.” He specifically highlighted that this push for increased investment and technological adoption is particularly critical for the region’s numerous small and medium-sized enterprises (SMEs), which are often less equipped to make such substantial investments independently but are vital for job creation and economic dynamism. Furthermore, he believes that strengthening regional cooperation through various mechanisms could serve as a powerful enabler to help the region collectively achieve these crucial goals of increased investment, technology adoption, productivity gains, and overall economic resilience against external shocks.
Riley Evans 
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