ASEAN leaders meet on sidelines of annual IMF-World Bank summit
ASEAN leaders will meet alongside the International Monetary Fund (IMF) and World Bank’s annual summit hosted by Indonesia in Bali today.
The 10-country bloc has benefited from the trade conflict between China and the United States. Given lower production costs in the region, a third of 430 China-based American companies are considering moving operations to ASEAN countries to escape US sanctions on China. Many firms have already shifted to Vietnam, Thailand and Malaysia.
Riding this business confidence is Malaysian PM Mahathir Mohammad, who has revived the idea of regionally-built Malaysian automobiles that source 80% of parts from Malaysia and Indonesia. Export markets show potential if the largest vehicle manufacturer in the region, Thailand, is an indicator. Bangkok is expecting to accelerate vehicle production to 3.5 million units by 2020—an 80% increase from 2016.
Expect ASEAN leaders to be optimistic about economic consequences of US-China trade relations and rely on the US and China to make amends sooner rather than later. However, global export markets remain dubious. Asian Development Bank has revised Asia’s 2019 growth forecast down 0.2% to 5.8% on the back of the ongoing US-China trade war. This may negatively affect the export prospects of the ASEAN automobile.
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