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Despite the lackluster outlook for China and India in 2022, we have reason to believe that there will be no comparable disaster in Southeast Asia – in fact, it is expected to see growth in 2021.
This of course sounds like something I would say as a strong proponent of Southeast Asia’s staggering potential. But, I’m only asking you to look at the evidence. I’m not saying 2022 will see Southeast Asia bask in sunny optimism. I say there are a range of domestic and international factors supporting growth in the region later this year.
Let’s examine these reasons and see why I think this year will be better than the last for Southeast Asia.
Tourism is finally on the rebound
Tourism is one of Southeast Asia’s biggest industries, and it’s finally rebounding. The problem is that this rebound is happening slowly – as the number of vaccines slowly increases in the region. However, slow is stable, and I don’t think many people would have expected an improvement after such a terrible run in 2020 and 2021.
As we slowly emerge from the shadows of this difficult time, we can see that efforts to improve tourist safety and confidence are working. We see more visitors every day – and not just backpackers and budget travellers. We are seeing a shift to more upscale demographics, especially in areas of medical tourism like in Thailand and Bali.
Regardless of demographics, the likes of Thailand have seen an increase from around 20,000 tourists in October 2021 to around 91,000 in November 2021. Of course, Thailand is used to three million tourists a month before Covid. But it’s always encouraging to see numbers slowly emerging from the doldrums.
Tourism has always been Southeast Asia’s collective asset. Its slow but steady march to its former $400 billion glory should begin to fuel other sectors, boosting consumer confidence and generally helping the region’s economic health.
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Rising Vaccines Help Private Sector Grow
Governments in the region are relying less on lockdowns to stop infections as vaccine numbers continue to rise. This allows the private sector to regain full capacity, as it is no longer hampered by movement and trade restrictions.
This is good news for the private sector. They can now resume operations and help drive growth in the region. This is also good news for consumers. They will now have access to more goods and services. Finally, this 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 meet 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 supported by increasing exports from Southeast Asia to a global economy starving for goods and services.
Southeast Asian countries will finally see an increase in their exports. They are no longer hampered by roadblocks and supply chain issues. The pace of this export growth may be slower than in other regions. But it remains a positive indicator of the future health of Southeast Asian economies.
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Rising energy demand means innovation and jobs
As Southeast Asian economies continue to grow, the demand for energy is also increasing. This increased demand is good news for energy producers. It will create a seller’s market and spur innovation in the aging fossil fuel-dominated energy sector.
Southeast Asia’s energy demand will increase by 60% by 2040, and that cannot pragmatically come from fossil fuels. It will have to come from a regional electricity network that uses more efficient and even renewable energy sources. The ASEAN Action Plan for Energy Cooperation (APAEC) has already provided for this.
This is also good news for workers. It will create jobs in the energy sector. Many of these jobs will come from sustainable energy sources, such as solar and wind power. These resources are becoming increasingly important as the world moves away from traditional, polluting sources of energy.
The increased energy demand 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 sustainable development, crucial in the years to come and underscored by our reputation for innovation on the world stage. It would also be a practical pull factor for green tourism.
Again, cautious optimism is warranted for Southeast Asia’s growth prospects in 2022. But optimism nonetheless. Rising tourist numbers, a rebound in the private sector and an impending increase in energy demand seem likely. Although there are still challenges ahead, such as improving long-knot supply chains and exporting goods, things are looking up for the region. Hopefully this growth can be sustained in the years to come as we emerge from this pandemic.
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