SINGAPORE, July 11, 2023 – The ASEAN+3 Macroeconomic Research Office (AMRO) maintained its short-term growth forecast for the ASEAN+3 region in its July quarterly update of the 2023 ASEAN+3 Regional Economic Outlook (AREO).
The ASEAN+3 region is expected to grow by 4.6 percent this year, up from 3.2 percent last year. Although the ongoing weakness in global trade has prompted a slight reduction in the ASEAN growth forecast for 2023 to 4.5 percent from April’s projection of 4.9 percent, this will be offset by improving prospects in the Plus-3 economies. AMRO revised its 2023 inflation forecast for the region—excluding Lao PDR and Myanmar—to 3.0 percent, slightly lower than its previous forecast of 3.4 percent.
Growth is expected to ease slightly to 4.5 percent in 2024 while inflation is projected to moderate further to 2.4 percent.
“ASEAN+3’s recovery is now riding on resilient demand within the region,” said AMRO Chief Economist, Hoe Ee Khor. “Recovering labor markets and falling inflation, along with steadily growing intra-regional tourism, are helping to cushion growth against sluggish external demand that is dampening the region’s exports.”
Inflation has decelerated across most of the ASEAN+3 economies due to easing global commodity prices and normalizing supply chains, allowing many of the region’s central banks to pause or ease the pace of monetary tightening. This, in turn, is bolstering consumption.
Absent new shocks, the region’s export performance may soon be turning a corner. The turnaround in the global semiconductor cycle, likely to begin later this year, will be a bright spot for many of the region’s exporters. Pent-up demand from more returning Chinese tourists will also provide an additional lift to growth.
AMRO, however, warns against several risks lingering on the horizon. The threat of recession in the United States and Europe, while lower now than three months ago, cannot be fully dismissed.
“Downside risks to the region’s outlook have receded since April, but we are not out of the woods yet,” Khor cautioned. “Heightened financial stress from tighter US monetary policy is a risk that the ASEAN+3 policymakers must continue to guard against.”
The ASEAN+3 Macroeconomic Research Office (AMRO) is an international organization established to contribute towards securing macroeconomic and financial stability of the ASEAN+3 region, comprising 10 members of the Association of Southeast Asian Nations (ASEAN) and China; Hong Kong, China; Japan; and Korea. AMRO’s mandate is to conduct macroeconomic surveillance, support regional financial arrangements, and provide technical assistance to the members. In addition, AMRO also serves as a regional knowledge hub and provides support to ASEAN+3 financial cooperation.