Asean, trade partners projecting 3.1% global economic growth

ECONOMIC ministers of member-states of the Association of Southeast Asian Nations (Asean) and its major trading partners expect a moderate global economic growth of 3.1 percent this year, despite the persistence of downside risks across markets.

This was more bullish than the projections of international financial institutions, including the World Bank which had projected a global economic growth of 2.4 percent, “unchanged from the disappointing pace in 2015.”

For next year, growth is expected to pick up pace at 3.4 percent, according to the economic ministers of the Asean, Australia, China, India, Japan, Republic of Korea, New Zealand, the Russian Federation and the United States, who met for the Fourth East Asia Summit (EAS) Economic Ministers’ Meeting in Lao PDR last Friday.

The ministers, in a joint statement issued on Friday, however, noted that the slower-than-expected recovery of the advanced economies, combined with tighter global financial conditions, might pose adverse challenges to regional growth.

Further, the outcome of the United Kingdom’s European Union Referendum—wherein 52 percent of Britain’s voting population had voted to leave the 28-member bloc—added to the “uncertainty in the global economy, and underscored the role of open trade policies and a strong and secure global trading system in promoting inclusive global economic growth.”

On the part of the EAS participating countries, the ministers  disclosed that their combined gross domestic product (GDPs) stood at $41.67 trillion in 2015, a slight decline from $42.02 trillion in  2014.

Asean’s total trade with the other eight EAS countries similarly fell by about 5 percent to $1.05 trillion in 2015 compared to the $1.11 trillion reported in 2014. These eight EAS countries accounted for 46.3 percent of Asean’s total trade globally.

Foreign Direct Investment (FDI) flows from EAS countries stood at $52.1 billion in 2015, representing 43.4 percent of total FDI inflows to the Asean.

During the meeting, the ministers noted the signing of the Trans-Pacific Partnership Agreement and the continued progress in negotiations toward the Regional Comprehensive Economic Partnership (RCEP) Agreement. These formed part of efforts to further enhance regional economic integration in East Asia.

The ministers likewise commended the establishment of the Asean Economic Community (AEC) in 2015 as a major milestone in regional economic integration. The ministers also welcomed the new AEC Blueprint 2025.  By 2025, the AEC is  expected to be “highly integrated and cohesive; competitive, innovative and dynamic; with enhanced connectivity and sectoral cooperation; a more resilient, inclusive, and people-oriented, people-centered community, and integrated with the global economy.”