While the ebbs and flows of the world economy have been felt this past year in different measures, we now look forward to 2024. Southeast Asia, in particular, has become a significant innovation and investment hub since the pandemic, with some indicators of its growth evident before then. 

We now delve into the economic prospects, identifying the fastest-growing economies poised to continue shaping the region’s future. Below are the economies most likely to continue to grow and the sectors most likely to flourish.

We explore the future of Southeast Asia’s digital economy

Indonesia

With a population of more than 270 million people, Indonesia has a GDP of USD 1,319 billion as of 2022, according to the World Bank. With a GDP growth of 5% and a middle class of around 70 million people, it is the third fastest-growing economy in the world.

Indonesia recently enacted a job creation law called the Omnibus Law. With it, the country “aims to attract investment, create new jobs, and stimulate the economy by (…) simplifying the licensing process and harmonising various laws and regulations”, according to a United Nations Conference on Trade And Development report. 

Malaysia 

Malaysia has a GDP of USD 406 billion as of 2022. It is relatively wealthy, considering the country’s 32 million inhabitants. However, the Per Capita GDP projection for 2023 is USD 13,034, somewhat lower than the International Monetary Fund’s (IMF) world average of 13,300.

The country’s most recent five-year development plan zeroes in on four catalysts to reach the plan’s goals:

  • developing future talent
  • accelerating technology adoption and innovation
  • enhancing connectivity and transport infrastructure
  • strengthening public service

The service sector, manufacturing, and construction are Malaysia’s top industries that expect a surge in the coming years. 

Singapore

This city-state’s 2022 GDP amounts to USD 644 billion, with the Monetary Authority of Singapore announcing that the country’s 2023 GDP growth forecast should end at the lower half of the 0.5–1.5% range, given the financial vulnerabilities caused by global economic uncertainty. The 6-million-people nation boasts a per-capita GDP of USD 87,884. 

Fintech, cybersecurity, and the health industry are the top sectors likely to spur the economy further. 

Vietnam

Vietnam’s shift from agricultural to manufacturing jobs has aided the country’s economic growth, in tandem with private investments, increased tourism, and the COVID-19 pandemic affecting Chinese supply chain processes. The Vietnamese GDP sits at USD 408 billion as of 2022. The Per capita GDP is at USD 4,086, and predictions indicate it will climb to 5,036 by 2025 per IMF projections.

While eCommerce and electronics aim to be some growth sectors, export manufacturing will make Vietnam a key player in the Southeast Asian production scene and beyond.

Thailand

The private sector in Thailand is the driving force behind the country’s USD 495 billion GDP. It enjoys a critical geographical position, and its transportation logistics are expanding its relations with the Chinese, Japanese, and Korean markets. 

Thailand’s combination of entrepreneurial openness and robust investment climate make it a handsome prospect for international business and one of the fastest-growing economies in the area. Experts expect the top three industries to grow in the future are eCommerce, automotive and manufacturing, and infrastructure development.

The Philippines

The Philippines has long been a services sector powerhouse, with business processing outsourcing being a massive job market for the nation’s 115 million people. Furthermore, Overseas Filipino Workers send home huge remittances, providing the country with a steady influx of money. According to a report by the World Bank, 2022 remittances to the Philippines amount to USD 38billion. Additionally, urbanisation projects are expanding while its middle class steadily grows, aided by the young and increasing population. 

In line with the region, the Philippines’ GDP is 404 billion, according to 2022 IMF figures. GDP per capita growth is slightly smaller than Vietnam’s, with an expected USD 4,523 by 2025. 

Cambodia

While the Cambodian economy is at a lower level than its Southeast Asian counterparts, it is also growing. Its 2022 GDP is USD 28.82 billion, with a current per capita GDP of USD 1,920, and IMF predictions show it will grow to USD 2,656 by 2028.

However, the post-pandemic travel boom is spurring a much-needed tourism influx into the country, as a return to pre-COVID levels in Cambodia is likely to be achieved between 2024 and 2025. Aside from tourism, solar panels, and electrical components manufacturing are expected to promote further economic growth.

In the past 5-10 years in Southeast Asia, most economies have grown thanks to an ever-increasing internet penetration rate, a growing middle class, strategic geographic positioning, and more. Indonesia, the Philippines, Thailand, Malaysia, and Vietnam appear to be the fastest-growing economies. 

From quick industrialisation rates in Vietnam to strategic digital innovation hubs in Singapore, each country is adding to the mix of making the ASEAN region a powerhouse of economic growth. As 2024 looms, global economic output will likely continue growing, ushering in a promising and bright future for the entire region.