Chapter 1: Macroeconomic Developments and Prospects

The ASEAN+3 region faced a challenging economic environment at the start of 2023. Central banks around the world continued aggressive monetary policy tightening to combat stubbornly high inflation, which sparked bouts of financial market volatility. Despite these headwinds, growth in the ASEAN+3 region remained resilient at 4.3 percent in 2023.

Growth momentum is expected to remain favorable in 2024 and 2025, alongside the further moderation in price pressures across the region. While risks to the outlook remain, the positive growth outlook offer the region a good opportunity to rebuild policy space lost in the pandemic. Policy should also focus on anchoring inflation expectations. In the longer term, policy coordination and continued structural reform will be crucial to raise the region’s growth potential, which has been dampened by the COVID-19 pandemic. Boosting investment in productive sectors and strengthening regional cooperation to enhance resilience would help reignite growth, allowing ASEAN+3 to remain a bright spot amidst an increasingly complex global economy.

Chapter 2: Navigating Tomorrow

ASEAN+3 has achieved remarkable economic progress over the past two decades. However, the tailwinds that facilitated this remarkable growth are weakening, at a time when the region is also confronted by multiple secular trends, including (1) aging, (2) a global trade reconfiguration, and (3) rapid technological change. The region’s future trajectory will be premised on its ability to navigate these major global shifts.

While the rapid pace of aging can weigh on ASEAN+3’s development prospects, these risks do not need to materialize if populations are allowed to age productively. Similarly, while the ongoing global trade reconfiguration is casting concerns on ASEAN+3’s time-tested export strategies, it is also creating new trade opportunities. Lastly, technology—while raising concerns about the future of work, especially with the rapid rise in artificial intelligence—will continue to unlock many solutions that ASEAN+3 can use to navigate aging, trade reconfiguration, and other structural headwinds.

Transforming these risks into opportunities can only occur if policies that emphasize infrastructure development, innovation, inclusivity are utilized to the fullest. Simultaneously leveraging the strength of regional cooperation will allow ASEAN+3 to secure sustainable, resilient, and inclusive growth for the future.

This article was first published by the ASEAN+3 Macroeconomic Research Office.

Photo by Matias Malka on Unsplash.