The economic ministers of the Association of Southeast Asian Nations (Asean) expect the region to grow at a faster pace of 5.1 percent this year given the healthy economic recovery of the United States and rising domestic consumption.
The group, however, was quick to caution about falling global oil prices, which could weigh down the growth of some Asean members.
“We expect Asean’s economic performance to improve in 2015 to 5.1 percent, above the 3.5 percent global growth projection. We based this on the stronger demand in advanced economies, energized by the robust US recovery and several policy stimulus measures in the Eurozone and Japan. Also, the region’s domestic demand could get a further boost from falling oil prices with higher purchasing power for consumers, lower input costs for producers and greater fiscal space,” the ministers said in a statement issued on the last day of the 21st Asean Economic Ministers’ Retreat in Malaysia.
According to the ministers, falling oil prices could also affect export earnings and government revenue for net oil-exporting economies in Asean.
The ministers further highlighted other concerns posed by currency volatility, including possible capital flow reversals within the region.
To help shield the region from such volatility, the Asean ministers emphasized the deepening economic integration.
“This is where the implementation of Asean’s regional economic integration can help member states overcome the challenges posed by global economic volatility. In 2013, intra-Asean trade amounted to $608.6 billion, accounting for 24.2 percent of total trade of the region, compared with $458.1 billion in 2008, when the Asean Economic Community (AEC) Blueprint was first implemented,” the Ministers noted.
“Similarly, total foreign direct investment (FDI) inflows to Asean amounted to $122.4 billion in 2013, representing the highest FDI flows into a region, globally. Intra-regional FDI accounted for a significant share of 17.4 percent of total FDI flows into the region in 2013,” they added.
So far, the measures being implemented under the Asean Economic Community blueprint have already generated crucial benefits, which are already flowing to Asean businesses and consumers.
These benefits include significant tariff liberalization; progress in trade facilitation measures such as self-certification; simplification of customs procedures; and the Mutual Recognition Arrangements on the movement of skilled professionals in the region.
Asean has also put in place legal structures on competition, consumer protection and intellectual property, contributing to an improved environment for business, the Ministers noted.
“The formal establishment of the AEC by end-2015 marks a major milestone in Asean’s effort to fulfill the goal of an integrated region, encapsulated under the rubric of One Vision, One Identity, One Community. The implementation of the AEC measures does not mean that Asean will become a single economic entity by Jan. 1, 2016. Rather, it sends a strong signal that positive measures have been put in place towards a more liberalized and integrated economic region,” the Ministers further explained.
For this year, the Ministers have agreed to focus on simplification of Customs procedures; harmonization of standards; further liberalization of services; enhanced trade facilitation; and conclusion of the services and investments portion of the Asean-Japan Comprehensive Economic Partnership.
The Ministers also discussed the progress in developing the SME (small and medium sized enterprises) Strategic Action Plan, with a specific focus on micro and small enterprises, and the promotion of globally accepted regulatory practices.