The Thai economy is projected to expand by an average of 2.8% per year over the next decade, boosted by a tourism rebound, its status as a regional automotive hub, and the regionalisation of large Thai conglomerates, says a DBS Bank report.
According to the "Navigating High Winds: Southeast Asia Outlook 2024-34" report, the Southeast Asian economy is expected to grow at an annual rate of 5.1% on average, with Vietnam and the Philippines driving the region's growth, with GDP expansion exceeding 6% in each of those countries. Indonesia will be close behind with 5.7% growth.
In Thailand, positive drivers are the tourism rebound, a key regional automotive hub with well-connected infrastructure, and the fact that leading major Thai conglomerates, namely Charoen Pokphand (CP), Central Group, PTT, Siam Cement and Thai Union are more regional than their Southeast Asian peers, the report noted.
However, negative factors remain in terms of an uncertain and turbulent political landscape, concerns over consolidation in key sectors including retail and telecommunications, and the demographic challenge, it notes.
"Southeast Asia is likely to outpace China GDP and foreign direct investment [FDI] growth over the next decade," said the report, released by the Angsana Council, Bain & Company and DBS Bank.
Last year, FDI in the six Asean economies covered amounted to US$206 billion, while China recorded $43 billion. Between 2018 and 2022, Asean-6 grew its FDI by 37%, compared to China's 10%.
Southeast Asia ahead of China
"As a result of strong domestic growth and the China +1 strategy, we are increasingly optimistic that Southeast Asia will outpace China's growth in both GDP and FDI in the next decade," said Charles Ormiston, advisory partner at Bain & Company and chair of the Angsana Council.
However, multinational investments will be highly contested, with the competition between countries improving outcomes for both businesses and consumers, he added.
Taimur Baig, managing director and chief economist at DBS Bank, said the increasingly protectionist and inward-looking global economy is unlikely to change.
"Most Southeast Asian economies and companies are well placed to find opportunities as capital allocation is recalibrated across geographies and sectors, while dealing with tech disruption and climate change," noted Mr Baig.
Meanwhile, BofA Global Research said the medium-term growth outlook for the six Asean countries covered is supported by investments, with an encouraging FDI pipeline.
In 2024, growth is forecast at 4.7% with momentum in the second half to be aided by possibly stronger tailwinds from further tourism recovery.
"For Thailand, we have not incorporated the impact of the digital wallet, with registration to start in August. In our baseline, we estimate a net impact of around 0.4% of GDP, with most of the impact in 2025," said the BofA report.