SE Asia likely to outpace China in economic growth, FDI

A new study by Angsana Council, Bain & Co., and DBS Bank forecasts that Southeast Asia will surpass China in terms of economic growth and foreign direct investment (FDI) over the next decade.

The report, Southeast Asia Outlook 2024-2034, forecasts a 5.1 per cent average annual GDP growth for Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, surpassing China’s projected 3.5 per cent to 4.5 per cent growth rate.

Vietnam is expected to lead the region with a 6.6 per cent growth rate, followed by the Philippines at 6.1 per cent. Singapore, while projected to be the slowest-growing economy in the group at 2.5 per cent.

The study attributes the region’s strong economic performance to robust domestic growth and the diversification of global supply chains away from China.

“Multinational investments will be highly contested, with the competition between countries improving outcomes for both businesses and consumers,” said

In 2023, the six Southeast Asian economies collectively received $206 billion in FDI, surpassing China’s $42.7 billion.

The report emphasises the importance of investing in emerging sectors aligned with each country’s strengths and resources.

Fostering a robust start-up ecosystem and developing strong capital markets are crucial for supporting new businesses and attracting FDI.

Southeast Asia’s potential for growth is significant, but the region must focus on developing a skilled workforce, improving infrastructure, and implementing sound economic policies to fully realise its potential.

Attribution: The Nikkei Asia & Angsana Council, Bain & Co., and DBS Bank SEA Outlook Report