- ASEAN-6's goods exports are likely to extend their improving growth momentum.
- We make four observations on the nature of the ASEAN-6-China trade integration.
- Much focus is also on the outcome of the US elections.
- A quarterly update of the individual ASEAN-6 countries shows a positive growth-inflation mix.
This is a summary of the report. For the complete version (including details, charts and individual ASEAN-6 developments), please download the PDF
Cyclical exports prospects
The cyclical upturn in the ASEAN-6’s goods trade has maintained momentum into mid-2024. A positive trade outrun was one of the key drivers behind our constructive outlook on the region this year, as outlined in ASEAN-6 2024 Outlook: Cautious optimism. In 1H24, the region’s exports (on a PPP-weighted basis) performed much better than the double-digit contraction in 2023, even though the pace lagged the prior years. As a leading indicator, our estimate of the ASEAN-6’s manufacturing purchasing managers’ index (PMI, on a PPP-weighted basis) had improved over the course of 1H24. New export orders in July 2024 were supportive for a couple of trade-reliant economies, such as Malaysia, Singapore, and Vietnam, which should bode well for overseas shipments.
ASEAN’s growing global exports contribution
ASEAN-6’s nominal goods exports (on a USD basis) grew by a faster CAGR between 2021-2023 vs pre-COVID (see chart). Assuming a conservative 3% annual growth for the rest of this decade, total goods exports in the region can potentially total USD2.2trn by 2030. The bloc’s influence on the global trade landscape has also increased over the past 20 years.
Greater ASEAN-6 and China integration
We had discussed benefits to ASEAN-6 from rising geopolitical competition and tensions in our previous reports - ASEAN-6: Tailwinds from supply chain reconfiguration and The rise of Chinese capital in ASEAN). The bloc has been a major recipient of China outbound flows, as businesses seek to overcome a further escalation in trade tensions between China and the West by moving production capacity to parts of the ASEAN region. We make four key observations.
- China’s share of goods exports to ASEAN-6 surpassed the US and EU in 2023, and this trend extended to 1H24 to reach 15.8%. On the flipside, rising Chinese exports to the ASEAN-6 economies have resulted in a wider goods trade imbalance, even though the bloc’s influence on global trade has grown.
- ASEAN-6’s growing role as an alternative production base can be seen from the rising share of intermediate imports from China since 2017 until 2021 (the latest available data from World Bank).
- Greater regional integration through the Regional Comprehensive Partnership (RCEP) that entered into force in 2022 suggests that China’s rising exports to ASEAN will likely continue. Moreover, ASEAN-6 is benefitting from increased foreign direct investment (FDI) due to the adoption of ‘China+1’ strategy by global companies, including greater interest from Chinese investors.
- A culmination of the trends observed in the last three points, the gap between the share of ASEAN-6 exports to the US and the region’s exports to China has narrowed over the past decade.
Geopolitics and the US presidential elections
Geopolitics and global growth will be other key developments to watch for the direction of the region’s trade. Amongst these, the outcome of the US presidential elections will be keenly watched by the region’s governments to gauge risks to external trade. Risks are three-pronged.
Country-specific updates
In the next section, we provide quarterly updates on each of the ASEAN-6 countries.
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