JAKARTA — Southeast Asia will post slower economic growth this year at between 5.7% and 6.4% because of economic turmoil in major trading partners the United States, Europe and Japan, the head of ASEAN said last Wednesday.
The 10 members of the Association of Southeast Asian Nations (ASEAN), ranging from impoverished Laos to financial center Singapore, posted average growth of 7.5% last year as their export-dependent economies rebounded following the global financial crisis.
But the debt crises in the United States and Europe, and the impact of Japan’s tsunami, will hurt prospects for further recovery this year, ASEAN Secretary-General Surin Pitsuwan said.
“What we are worried about is if it is going to take a long time for them to get their act together, we may be affected,” Mr. Pitsuwan told Reuters in an interview.
“I’m sure we are going to take a hit this year. This is a new reality we have to live with.”
The region sends about 30% of its exports to the United States, Europe and Japan, though this proportion has declined from 53% in 1993. Intra-ASEAN trade has grown to make up a quarter of the total.
“It’s not very high,” said Mr. Pitsuwan. “It needs to go up to 30%, it needs to go up to 35%.”
The region, encompassing 600 million people and a combined $2-trillion economy, is aiming for a free-trade bloc by 2015 that would spur movement of goods, people and services.
Mr. Pitsuwan said the main constraint to such a bloc was slow national implementation of regional agreements.
Although a sluggish Japanese economy and a devastating tsunami in March this year had hurt trade with the world’s number three economy, Mr. Pitsuwan said ASEAN also planned to make a big push to get Japanese investment.
Damage to manufacturing plants and power supply from the tsunami, slow growth at home and a record high yen were all factors pushing Japanese firms to expand abroad, he said.
Strong economies and improving infrastructure made ASEAN an attractive destination, with direct investment from both ASEAN firms and foreign companies having surged, he said.
“The Japanese are at a turning point … ASEAN has to come up with a collective package to welcome the Japanese,” Mr. Pitsuwan said, adding this could include tax incentives, improved immigration terms, and education and health care provision for families. — Reuters
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