Despite persistent external shocks and waning external demand over the first half of 2023, Emerging Asia’s exports will continue to be supported by robust regional demand, which has helped buffer against global downside risks. Access to multiple markets within closer geographic range has broadened the regions’ export destinations beyond the United States, European Union, and Japan. In the first quarter of 2023, intraregional exports and imports (Emerging Asia to Emerging Asia) are at 26.4% and 26%, continuing to surpass the region’s exports to and imports from the United States, European Union or Japan (Figure 3). ASEAN records an even larger share of exports to Emerging Asia, with ASEAN-to-ASEAN exports estimated at 23.4%, ASEAN to China exports estimated at 14.9% and ASEAN to India exports at 3.7%, for a total of approximately 42% for the region (Figure 4). Meanwhile, ASEAN’s exports to the United States, European Union and Japan are substantially lower, at 30.1%.
Economic Outlook for Southeast Asia, China and India 2023 - Update
Regional demand helped sustain exports
Figure 3. Emerging Asia’s exports to and imports from regional and global destinations (% of total)
Notes: 1) Exports: Emerging Asia as area of origin includes China, India, Indonesia, Malaysia, Singapore, Thailand and Viet Nam. Emerging Asia as destination includes China, India and the ASEAN member countries. 2) Imports: Emerging Asia importer countries include China, India, Indonesia, Malaysia, Singapore, Thailand and Viet Nam. Emerging Asia as area of origin includes China, India and the ASEAN member countries.
Source: CEIC.
Figure 4. ASEAN exports to selected Asian and global destinations (% of total)
Note: ASEAN as area of origin includes Indonesia, Malaysia, Singapore, Thailand and Viet Nam (Thailand’s exports exclude India). ASEAN as destination includes the ten ASEAN member countries.
Source: CEIC.
Another key factor in Emerging Asia’s exports sector is that the dynamic of intraregional trade has shifted, with the region changing from being merely the source and destination of intermediate goods to becoming the main export destination for final goods. Such trade scenario is expected to persist brought about by the region’s sustained expansion in economic growth, income and working population, fuelling the rapid rise of the consumer class. This, in turn, is expected to sustain regional and domestic demand. In particular, the major economies in ASEAN are projected to expand their share of final demand, with their growing middle-class populations driving the consumer market. As an example, Indonesia is projected to become a large consumer market by 2030, with almost 76 million people (Statista, 2021). The Philippines’ consumer class is also expected to post rapid growth (Statista, 2021).
Robust intraregional trade dynamics are also cushioning the region from an increase in protectionist policies. In the first half of 2023 alone, Emerging Asia was affected by about 220 protectionist trade policies enacted by different countries and regions worldwide. Stronger ties among Emerging Asian economies will strengthen regional integration and foster stability in trade relations among economies. The Regional Comprehensive Economic Partnership (RCEP) free trade agreement, signed in 2020, will become instrumental in accelerating regional integration in Emerging Asia in the long term. Meanwhile, the Indo-Pacific Economic Framework for Prosperity (IPEF), launched in 2022, involves 12 initial partners, including eight countries from Emerging Asia: Brunei Darussalam, India, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Viet Nam. Key areas expected to be developed under the trade initiative are: i) the development of small and medium-sized enterprises (SMEs) and their integration into the digital economy; and ii) the strengthening of supply chain commitments that aim to cushion regional trade from disruptions in supply chains and rising geopolitical risks.