Southeast Asia Expected to Grow Faster Than China in the Next Decade

Having lived in the shadow of China's economic miracle, Southeast Asia stands poised to write the next chapter of Asia's economic development. The Angsana Council,  Bain & Company, and DBS Bank predict that six Southeast Asian countries - Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam - are likely to average 5.1% annual GDP growth until 2034, with China expected to grow only 3.5% to 4.5% in that time.  

To be sure, much of this trend will likely be driven by global politics, with tariffs and political tensions diverting foreign direct investment from China into Southeast Asia. Yet, Southeast Asia offers numerous economic advantages investors often overlook. The region enjoys a strong demographic dividend, with more than 60% of its population under age 35, per a November 2023 Maybank study. And more of this young population is entering the middle class, creating robust demand for foreign goods and investment.  With a growing digital economy, skilled workforce, and competitive wages, Southeast Asia is well-equipped to seize the fruits of Industry 4.0, according to a June 17, 2022 HSBC report. 

Nevertheless, investing in Southeast Asia is not without challenges. Its diverse, and sometimes arcane, regulatory environment makes cross-border investment challenging, and the prevalence of corruption coupled with a tradition of state economic intervention creates political and compliance risks for investors. Additionally, as business and politics in the region are often driven by personal relationships, foreign investors unfamiliar with the region's complex socio-cultural context are often at a disadvantage.  To profit in the coming decade, investors should avail themselves of robust Southeast Asia expertise to navigate this dynamic and complex region.