KUALA LUMPUR: Geopolitics, economic headwinds and policy uncertainties are the three main risk factors confronting Asean, according to World Bank senior economist Aakash Mohpal.
He said Asean countries, except for Indonesia, have recorded slower gross domestic product (GDP) growth compared with pre-pandemic levels.
The Gaza conflict, he added, has disrupted transportation, leading to longer shipping routes than the previous Suez Canal route, causing a 40% increase in shipping costs.
Mohpal said the escalation of the conflict could affect the prices of essentials and exports from the Asean region.
Speaking at a panel discussion at the Asean Economic Opinion Leaders Conference: Outlook for 2025, the economist added that slower growth in China has also affected economic growth among Asean countries.
“When growth in China slows down, growth in other developing economies, including Asean, slows down,” he said during the panel session titled “World Bank’s Economic Outlook for Asean” at Menara Miti yesterday.
China, the world’s second largest economy, reported a 4.6% year-on-year GDP growth for the third quarter of 2024, its slowest since mid-2023.
“Finally, the last factor is policy uncertainties, where we see an increase in trade-distorting measures worldwide,” he said, adding that these measures include subsidies and tariffs, among others.
Mohpal suggested that “deeper” trade ties and domestic policies on economic reforms are needed to build resilience and insulate Asean and the East Asian region from these challenges.
He also said emphasis should be placed on small and medium enterprises (SMEs) to create resilient local economies and drive job creation.
“We need to invest and promote local homegrown SMEs to make local economies more resilient,” he said, adding that it is important to create favourable market conditions, including access to capital, inputs, labour and human capital.
