Southeast Asia’s secret recipe: The rise of an emerging region

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Shopping mall in Bangkok: Thailand’s economic growth since 2008 has been tremendous

Developing Asia is often looked at as the global steam engine of economic growth. But what is making it more successful than other emerging regions?

By Justin Calderon

In late 2012, the International Monetary Fund (IMF) projected that Cambodia, the once troubled Southeast Asian nation, will be one of the fastest growing nations in the Asia-Pacific region over the next five years, with GDP growth reaching 7.7 per cent annually by 2017.

Cambodia’s favourable growth position is just one of many in developing Asia, which has become a byword for resilience, proving itself steadfast in the face of numerous economic crises. Southeast Asia in particular has remained extremely strong, showing that growth can be maintained even though economic powerhouses China and India continue to experience slowdowns.

So what is the secret recipe of Cambodia and its reginoal peers, most notably Laos, Thailand, Malaysia, the Philippines and Indonesia, all forecast to keep GDP growth between 4.8 per cent and 7 per cent over the coming years?

It helps to zoom out a bit to see why developing Asia is buggering on so well.

The IMF has forecast that Sub-Saharan Africa will be the second fastest growing region over the coming years, and remain one of the most resilient in decades to come.

Large oil discoveries off the coats of not a few countries have helped. Ghana, Mozambique and Kenya are all rushing to write in new oil revenues to their budget. Lower-income countries continue to benefit off of high commodity prices and mineral wealth, such as that found in Sierra Leone.

Look to South America, Central Asia and the Gulf region, and a similar pattern appears as well.

While Indonesia is the largest export of thermal coal in the world and Malaysia’s state-run oil giant Petronas is amount the largest oil firms on the planet, developing Asia has more than just energy and commodities; it is region that is home to the largest young consumer market in the world.

These favourable demographics are fueling economies that are quickly growing to keep up with the demands of nouveau middle classes – and on a large scale.

Similar markets are visible in Colombia and Kenya, for sure. But the region as a whole cannot mirror that which exists in Southeast Asia.

New apartment blocks, new energy plants to power them and new roads to get to them are all being constructed to design the world for the next generation. This new and young elite in the largest Southeast Asian economies have benefited from higher quality education, which in turn has formed the foundation of business service jobs needed to diversify the economy beyond traditional sectors.

The booms occurring in Cambodia and Laos are missing this element, however, and positive figures point to more of a quick start from a lower base line of growth.

As one of Asia’s weakest links, Laos will need to grow out of its copper and gold mining industry, while Cambodia will have to form a basic education system to bring the residents of Phnom Penh’s new high rises up to snuff.

Southeast Asia’s overall growth will benefit all in the region, and indeed the world. But the fabric of this pattern – the Asian people themselves – is a recipe all developing markets can generate by opening up markets to inclusive growth and encourage their population to participate in the country’s future.

 

 

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Reading Time: 2 minutes

Shopping mall in Bangkok: Thailand’s economic growth since 2008 has been tremendous

Developing Asia is often looked at as the global steam engine of economic growth. But what is making it more successful than other emerging regions?

Reading Time: 2 minutes

Shopping mall in Bangkok: Thailand’s economic growth since 2008 has been tremendous

Developing Asia is often looked at as the global steam engine of economic growth. But what is making it more successful than other emerging regions?

By Justin Calderon

In late 2012, the International Monetary Fund (IMF) projected that Cambodia, the once troubled Southeast Asian nation, will be one of the fastest growing nations in the Asia-Pacific region over the next five years, with GDP growth reaching 7.7 per cent annually by 2017.

Cambodia’s favourable growth position is just one of many in developing Asia, which has become a byword for resilience, proving itself steadfast in the face of numerous economic crises. Southeast Asia in particular has remained extremely strong, showing that growth can be maintained even though economic powerhouses China and India continue to experience slowdowns.

So what is the secret recipe of Cambodia and its reginoal peers, most notably Laos, Thailand, Malaysia, the Philippines and Indonesia, all forecast to keep GDP growth between 4.8 per cent and 7 per cent over the coming years?

It helps to zoom out a bit to see why developing Asia is buggering on so well.

The IMF has forecast that Sub-Saharan Africa will be the second fastest growing region over the coming years, and remain one of the most resilient in decades to come.

Large oil discoveries off the coats of not a few countries have helped. Ghana, Mozambique and Kenya are all rushing to write in new oil revenues to their budget. Lower-income countries continue to benefit off of high commodity prices and mineral wealth, such as that found in Sierra Leone.

Look to South America, Central Asia and the Gulf region, and a similar pattern appears as well.

While Indonesia is the largest export of thermal coal in the world and Malaysia’s state-run oil giant Petronas is amount the largest oil firms on the planet, developing Asia has more than just energy and commodities; it is region that is home to the largest young consumer market in the world.

These favourable demographics are fueling economies that are quickly growing to keep up with the demands of nouveau middle classes – and on a large scale.

Similar markets are visible in Colombia and Kenya, for sure. But the region as a whole cannot mirror that which exists in Southeast Asia.

New apartment blocks, new energy plants to power them and new roads to get to them are all being constructed to design the world for the next generation. This new and young elite in the largest Southeast Asian economies have benefited from higher quality education, which in turn has formed the foundation of business service jobs needed to diversify the economy beyond traditional sectors.

The booms occurring in Cambodia and Laos are missing this element, however, and positive figures point to more of a quick start from a lower base line of growth.

As one of Asia’s weakest links, Laos will need to grow out of its copper and gold mining industry, while Cambodia will have to form a basic education system to bring the residents of Phnom Penh’s new high rises up to snuff.

Southeast Asia’s overall growth will benefit all in the region, and indeed the world. But the fabric of this pattern – the Asian people themselves – is a recipe all developing markets can generate by opening up markets to inclusive growth and encourage their population to participate in the country’s future.

 

 

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