The 10-member Association of Southeast Asian Nations (ASEAN) is the fastest-growing economic bloc in the world. It comprises Brunei Darussalam, Cambodia, Indonesia, Lao People’s Democratic Republic, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. 

These member-states form the ASEAN Economic Community, which represents a consolidated consumer base of over 670 million people and a single market cumulatively worth USD 3.6 trillion as of 2022. Taken together, ASEAN is the fifth largest economic bloc that accounts for 3.6 per cent of global trade.

Except Singapore, these countries are considered developing economies and demonstrate high growth prospects. In contrast to aging and shrinking populations among mature economies in Europe and the Americas, ASEAN features a young and skilled workforce, with the services sector propelling rapid growth in Singapore, Thailand, Philippines, and Malaysia. 

The region facilitates free trade agreements with global trading partners and is likewise part of the Regional Comprehensive Economic Partnership (RCEP), the world’s biggest trading association. Reciprocity agreements on goods and services trade, traveller visas, and information exchange facilitate trade and investments within the region. Top trade commodities are electrical parts, mineral fuels, nuclear reactors, and plastic materials as of 2022, according to ASEAN data. 

ASEAN countries are also among the top destinations for foreign direct investments, accounting for 17 per cent of total investment flows globally in 2022. Preferred sectors are finance and insurance, manufacturing, energy transition equipment, wholesale and retail trade, as well as the digital economy. However, many developing nations in the region suffer from underinvestment in infrastructure and logistics, coupled with policy and regulatory gaps that hamper the ease of doing business. These concerns, however, illustrate the huge gap in investments and the immense growth potential that can be realized in this side of the world. 

House view: Lundgreen’s remains bullish towards the ASEAN and envisions that the region will remain the fastest growing economic bloc. Additionally, the company is overweight towards ASEAN stocks as upbeat economic activity will generate strong returns. Despite some slowdown observed in the global market, ASEAN’s large consumer base will continue to drive robust demand for goods and services within and outside the region.

Updated as of 25 September 2024