Why Southeast Asia Will See Stronger Growth in 2022
The region's economy is well-positioned to experience significant growth this year.
That of course does sound like something I would say as an ardent believer in Southeast Asia’s staggering potential. But, I only ask you to look at the evidence. I'm not saying 2022 will see Southeast Asia basking in sunny optimism. I am saying there are a range of domestic and international factors that are supportive of growth in the region come later this year.
Let's look at those reasons, and see why I believe this year will be better than the last for Southeast Asia.
Tourism is finally on the rebound
Tourism is one of the most important industries in Southeast Asia, and it's finally on the rebound. The problem is, this rebound is happening slowly — as vaccination numbers slowly increase across the region. Slow is steady however, and I don't think many people would have expected improvement at all after such a terrible run through 2020 and 2021.
As we slowly emerge from the shadow of that difficult time, we can see that efforts to improve tourist security and confidence are working. We're seeing more visitors every day — and it's not just backpackers and budget travelers. We're seeing a swing towards a more upmarket demographic, especially in the fields of medical tourism in the likes of Thailand and Bali.
Regardless of the demographic, the likes of Thailand have seen an increase from around 20,000 tourists in October 2021 to about 91,000 in November 2021. Of course, Thailand is accustomed to three million tourists per month pre-Covid. But it's still heartening to see numbers slowly emerging from the doldrums.
Tourism has always been the ace up Southeast Asia's collective sleeve. Its slow but steady march towards its former $400 billion glory should start to feed into other sectors, increasing consumer confidence and generally just helping the region's economic health.
Increasing vaccination numbers are helping the private sector gain momentum
Governments in the region are relying less on lockdowns to stop infections as vaccination numbers continue to climb. This is allowing the private sector to get back to full capacity, as they are no longer hampered by restrictions on movement and trade.
This is good news for the private sector. They can now resume their operations and help to spur growth in the region. It is also good news for consumers. They will now have access to more goods and services. Finally, it is good news for workers. They can now find employment in the private sector.
A revitalized private sector means improved supply chains
The private sector has its work cut out for it. Improving supply chains and production lines to help address demand that has been pent up for a year or two will take time. That said, I cautiously expect a high-demand market to impact the region soon. Its GDP is buoyed by increasing exports from Southeast Asia to a goods and services-starved world economy.
Countries in Southeast Asia will finally see an increase in exports. They are no longer hampered by roadblocks and supply chain problems. The pace of this export growth may be slower than other regions. But, it is still a positive indicator for the future health of Southeast Asia's economies.
Increased energy demands mean innovation and jobs
As Southeast Asia's economies continue to grow, so too does the demand for energy. This increased demand is good news for energy producers. It will create a seller's market and drive innovation in the aging, fossil fuel-dominated energy sector.
Southeast Asia's energy demands will grow by 60 percent by 2040, and that can't pragmatically come from fossil fuels. It will have to come from a regional power grid that uses more efficient and even renewable energy sources. The ASEAN Plan of Action for Energy Cooperation (APAEC) has already laid plans for this.
This is also good news for workers. It will create jobs in the energy sector. Many of these jobs will be in sustainable energy sources, such as solar and wind power. These resources are becoming more and more important as the world moves away from traditional, polluting energy sources.
The increased demand for energy in Southeast Asia is a sign of the region's economic health and vitality. It is also a sign of the region's commitment to sustainability, crucial in the years ahead and highlighted by our reputation for innovation on the world stage. It would also be a handy pull factor for green-focused tourism.
I say again, cautious optimism is warranted for Southeast Asia's growth prospects in 2022. But optimism nonetheless. Increasing tourism numbers, a rebound in the private sector and an impending increase in energy demands look likely. While there are still some challenges that need to be addressed, such as improving long-knotted supply chains and exporting of goods, things are looking up for the region. Let's hope that this growth can be sustained in the years ahead as we climb out of this pandemic.
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