On November 20, Ho Chi Minh City Securities Corporation (HSC), in collaboration with the International Monetary Fund (IMF), organized a seminar on “Preserving Asia as the Global Engine of Growth” for HSC’s clients.
The Asia-Pacific region is experiencing a period of dynamic transformation and achieving remarkable economic progress. As growth slows in developed nations, Asia is now considered the primary driver of the global economy.
However, this comes with challenges. Geopolitical tensions, global trade disputes, and the push for sustainable development all pose threats to continued growth. To maintain momentum, countries in the region must shift resources towards higher-productivity service sectors. This shift will not only boost productivity but also create new trends and opportunities across the region.
Short-term growth outlook shows positive improvement
Dr. Johannes Wiegand, Head of Regional Surveillance for Asia and Pacific at the IMF, presented an optimistic outlook for Asia-Pacific GDP growth in the short term. While the outlook for the Asia-Pacific region has slightly improved compared to the IMF’s April forecast, growth is still projected to moderate in 2024 and 2025, he said.
The IMF has revised its forecasts upward from April. The region’s growth forecast for 2024 is now 4.6%, up from 4.5%. This reflects stronger-than-expected economic performance in the first half of the year. Asia-Pacific is expected to contribute approximately 60% of global growth in 2024.
The 2025 forecast has also been adjusted to 4.4%, up from 4.3%. This revision is attributed to supportive macroeconomic and financial conditions, which are expected to stimulate economic activity. Inflation has also eased in many countries across the region.
While growth slows in the U.S., Europe, and China, the Asia-Pacific region remains a bright spot in the global economy. Emerging markets, particularly India and ASEAN, are demonstrating resilience driven by steady consumer demand, public investment, and exports.
Within ASEAN, Indonesia, the Philippines, and Vietnam are all poised for strong growth. However, Thailand’s economic activity appears more subdued.
Key factors contributing to this positive outlook include robust personal consumption, investment, exports, and a thriving service sector. The resurgence of tourism from China is also providing a boost to many emerging economies in the region.
Navigating risks and boosting productivity
At the “Preserving Asia as the Global Engine of Growth” seminar, experts highlighted key challenges facing the region, particularly in light of the current volatile global economic climate.
The recent re-election of U.S. President Donald Trump has sparked debate about the potential impact of his proposed economic policies.
“The risk of geo-economic fragmentation is rising, reflecting escalating geopolitical tensions, uncertainty about the strength of global demand, trade tensions, and the potential for financial instability,” said Johannes Wiegand of the IMF.
Another concern is the impact of slowing domestic demand in China and deflationary pressures on prices and trade within the region.
While the Asia-Pacific region has made impressive economic strides, with GDP per capita approaching the global average and poverty rates declining significantly, growth drivers are showing signs of slowing, according to Wiegand.
Historically, investment and productivity, fueled by accumulated capital and a strong workforce, have propelled growth. However, since the global financial crisis, productivity and investment growth have lost momentum, merchandise trade has weakened, and demographic advantages are diminishing. Agricultural productivity lags significantly behind other sectors, hindering structural transformation.
As an IMF expert with over 20 years of experience in research, development policy, and climate, Wiegand also pointed to high household debt and vulnerability to climate change as significant risks for many economies in the region.
The rise of artificial intelligence (AI) is expected to disrupt labor markets, potentially leaving some countries behind if they fail to adequately prepare for the digital transformation. “Digital technology readiness is crucial for countries to integrate and capitalize on new economic opportunities,” Wiegand emphasized.
The key challenge for the Asia-Pacific region is to shift resources towards higher-productivity services to boost productivity and sustain growth. According to the IMF, supportive government policies are essential for achieving sustainable growth.
These policies include investing in human capital and high-quality infrastructure; reducing barriers to capital and labor reallocation across sectors by improving the business and investment environments; promoting market participation and competition; and increasing access to finance.
Given the complex geopolitical landscape, each country in the region will need to adopt its own strategy, leading to ongoing market fluctuations. Speakers at the “Preserving Asia as the Global Engine of Growth” seminar urged businesses to stay informed about international and domestic market developments and leverage in-depth analysis to anticipate global and regional economic trends. The seminar’s recommendations are intended to guide investors, businesses, and governments in making necessary adjustments to ensure that Vietnam, ASEAN, and Asia as a whole continue to drive global growth in the future.
