StanChart's Lee expects the Asean region to see growth of about 4.8% in 2025, similar to the growth rate in 2024.
PETALING JAYA: South-East Asia is expected to maintain its growth momentum this year, driven by ongoing supply chain relocations and further integration into global trade networks, says Standard Chartered (StanChart) Research Asean and South Asia chief economist Edward Lee.
Although Asean economies grew by 4.8% in 2024, which is slightly below the pre-Covid growth rates of 5.2% to 5.3%, Lee highlighted that the region remains an open economy.
“In the medium term, we see some benefits from the supply chain relocations and increased foreign direct investments (FDIs).
“Asean accounts for about 16% of global FDIs, despite contributing only 3.5% to global gross domestic product (GDP),” he said during a presentation at StanChart Global Research briefing for the first half of 2025.
He added that US imports from Asean had increased to 6% of total imports, up from 4%, reflecting the region’s growing integration into global trade networks.
Countries like Vietnam, Thailand and Malaysia are well-positioned to capitalise on supply chain shifts.
However, Lee cautioned that short-term gains may be limited based on the tariff hike against China.
“For example, during Trump’s first implementation of US tariffs on Chinese goods, imports of the tariff-affected items into the United States dropped.
“If we assume these items were reallocated to the rest of the world, exports to the United States of these goods should have risen by about 7% to 8%.
“However, they only increased by 2%,” he noted.
Overall, Lee expects the Asean region to see growth of about 4.8% in 2025, similar to the growth rate in 2024.
For Malaysia, Lee projected a GDP growth of 5% in 2025, driven by strong consumer spending, a robust labour market and resurgence in tourism.
“Tourism recovery has been very strong. A one million increase in tourist arrivals can boost Malaysia’s current account by about 0.2% of GDP,” he said.
He noted that underemployment remains slightly above pre-Covid levels.
Lee expected inflation in 2025 in Malaysia to come in at 2.2%, with subsidy rationalisations adding 0.3 percentage points to the 1.9% inflation rate in 2024.
“The central bank will likely adopt a wait-and-see approach with no changes to the policy rate this year,” Lee predicted.
Meanwhile, StanChart fixed income research global head and Asia research head Kaushik Rudra described the global economic growth of 3% in 2024 as “fairly soft”.
He noted that while US growth had been exceptional, driven by strong consumer spending and a resilient services sector, major European economies are nearing recession.
“China remains a concern,” Rudra said.
On the ringgit, Lee said it is no longer undervalued, reflecting improved economic fundamentals.
“The positioning for the ringgit remains favourable, particularly with bond investors ‘underweight’ on ringgit bonds.
“However, resident outflows in asset allocation persist, influenced by the interest rate differential between Malaysia and the United States,” he added.
