Despite prevailing emerging market jitters, Southeast Asia is one region that offers a “compelling” story as it’s turning out to be a “bright spot” on the global economic stage, a top strategist at British banking giant HSBC said.
In a recent commentary titled “Southeast Asia: Hiding in plain sight,” HSBC head of international and head of strategy and planning for Asia-Pacific Matthew Lobner said “this fast-growing region is worth a serious look as a location to manufacture in, source from and sell to, despite the downturn in global emerging markets over the past few months.”
Sheer size is part of the story, something that’s not fully recognized by observers outside Asia, Lobner said.
As a bloc, the 10-member Association of Southeast Asian Nations (Asean) forms an economic powerhouse whose combined gross domestic product (GDP) of nearly $2.8 trillion in 2017 topped that of the United Kingdom, France or India, he noted.
If Asean were a single economy, Lobner noted that it would rank sixth globally, after the United States, China, Japan, Germany and the Eurozone. Furthermore, he noted that Asean’s 650 million people outnumbered Canada’s population by more than 15:1, and that of the United Kingdom by almost 10:1.
Beyond these headline numbers, the HSBC strategist said emerging markets jitters obscured, for now, how far the region had come since the 1997-98 Asian financial crisis, or even the so-called taper tantrum of 2013.
“Its constituent economies, broadly speaking, are now more resilient to external financial shocks. Foreign exchange reserves have risen. External debt levels have come down. Current account balances have improved,” he said.
Lobner noted how the region’s manufacturing capabilities were now playing an integral role in global trade and supply chains and businesses were going high-tech.
“What’s more, many Aseancompanies, both established and start-ups, now have the experience and clout to serve international markets and attract sizable investments from abroad. Witness how Jollibee, a popular fast-food chain, which opened its first Canadian restaurant in 2016 in Winnipeg, has expanded beyond its home market in the Philippines, with the goal of becoming a leading global player,” he said.