AEM 42 Looking to a Dynamic, Sustainable ASEAN

Ministers welcomed signs of an improving global economic environment. World economic growth is expected to increase to over 4 per cent in 2010 and 2011. Leading the economic recovery are the economies of developing Asia, particularly key economies in the region such as China, India, and the ASEAN Member States. The forecast for ASEAN’s real GDP growth in 2010 is over 5 per cent, compared with 1.5 per cent in 2009.

Ministers noted that ASEAN’s total merchandise trade remained resilient in 2009, dropping by only 19 %, from US$1,897.1 billion in 2008 to US$1,536.8 billion in 2009, compared to the 22.6 % decline in global trade in 2009. Intra-ASEAN trade was down by 20.0 % and so was trade with the rest of the world, which contracted by 18.7 %. ASEAN trade with its Dialogue Partners also remained strong despite the global financial/economic crisis. Even with a 9.5 % decline in total trade, China emerged as ASEAN’s largest trading partner in 2009. The European Union and Japan came in as ASEAN’s second and third largest trading partner despite significant drops in total trade, i.e. 17.6 % and 25.0 %, respectively. ASEAN’s trade surplus with the rest of the world reached US$ 61.2 billion in 2009, more than double the level in 2008.

 

Ministers anticipate higher foreign direct investment inflows into ASEAN in 2010 and beyond, after a downturn in 2008 and 2009. This is borne out by UNCTAD estimates of an increase of global FDI flows to US$1.2 trillion in 2010 and to US$1.3-1.5 trillion in 2011. Nevertheless, Ministers recognized that FDI prospects are dependent on global recovery conditions

 

ASEAN’s share of total global FDI inflows increased to 3.6 per cent in 2009, from 2.8 per cent in 2008, despite the recent economic downturn. This reflects well of the ASEAN region in terms of its ability to continue to attract a higher share of investment flows, despite the lower overall value of FDI inflows of US$39.6 billion in 2009.

 

The main sources of FDI inflows to ASEAN remained the European Union with a share of 18.3 per cent , Japan (13.4 per cent), and the United States (8.5 per cent). Of significance are the inflows from intra-ASEAN sources, which accounted for 11.2 per cent of ASEAN inflows in 2009, making ASEAN itself the third largest source of investment for the region.

 

The services sector continued to account for the highest levels of FDI inflows, amounting to US$26.8 billion or 68 per cent of total ASEAN FDI inflows in 2009. The main sub-sectors in services include trade, real estate, and financial intermediation which accounted for 15 per cent, 32 per cent and 27 per cent respectively of the total FDI flows into the services sector. The manufacturing sector was second with US$8.5 billion or 22 per cent of total FDI flows. The mining and quarrying sector accounted for US$3.2 billion which is 8 per cent of the total FDI flows into ASEAN.