Revised Economic Growth Projections for ASEAN+3: Impact of China and Vietnam Decline

Revised Economic Growth Forecast for ASEAN+3

This year’s growth forecast for the ASEAN plus three economies – China, Hong Kong, Japan, and South Korea – has weakened from 4.4 percent to 4.2 percent, primarily due to adjustments for China and Vietnam, according to the ASEAN+3 Macroeconomic Research Office (AMRO).

Details of the Growth Adjustments

• The Singapore-based forecasting organization revised its 2024 growth expectations for China from 5.3 percent to 5 percent.
• Vietnam's forecast was lowered from 6.3 percent to 6.2 percent.

The ASEAN is expected to expand by 4.7 percent in 2024, while the plus-three economies are projected to grow by only 4.1 percent overall.

Factors Affecting the Growth Rates

Growth for the region will be driven by continued recovery in external trade, resilient domestic demand, and a boost in tourism due to relaxed visa policies. However, slower growth in China in the second quarter of the year has weighed heavily on the forecasts.

Key factors influencing the revisions include:

1. Weaker than-expected US employment data.
2. China's lower growth in the second quarter.
3. Global financial markets turbulence in August.
4. Shifting dynamics in the upcoming US presidential election.

Additional Forecasts and Economic Stimulus

The Asian Development Bank recently toned down expectations for Southeast Asia from 4.6 percent to 4.5 percent growth in 2024. Despite this, expectations for China's growth remain at 4.8 percent. China recently introduced a stimulus package to invigorate its economy, impacted by weak domestic demand and property market distress.

China is expected to release economic data for September and the third quarter this month, following a better-than-expected GDP growth of 5.3 percent in the first quarter.