As of the end of 2021, expectations were high that the strong post‑pandemic recovery already evident within the ASEAN bloc would continue to gather pace in 2022. With the exception of Brunei Darussalam and Myanmar, all of the bloc’s constituent nations had recorded positive GDP growth, with Singapore and the Philippines leading the charge at 7.6% and 5.7%, respectively, while Laos (2.5%) and Thailand (1.6%) brought up the rear.

At the time, the key driver of ASEAN’s recovery was the pent‑up consumer demand that characterised both its domestic and major external markets. Its overall level of foreign direct investment (FDI) was also up, as global manufacturers, caught on the hop by pandemic‑induced trade bottlenecks, sought to diversify their supply chains. With its fast‑growing youthful, digitally savvy population another plus for investors, the bloc benefitted from particularly strong FDI inflow in its manufacturing, financial and insurance sectors.

As 2022 progressed, however, major economic headwinds started to gust across the globe. The inflationary pressures already apparent in 2021 accelerated in February as the Russia‑Ukraine conflict escalated, a development that saw oil, gas and grain prices soar. In a bid to rein in these spiralling price rises, the US Federal Reserve then introduced a series of aggressive rate hikes, which saw the value of the dollar strengthen against many Asian currencies.

The situation was subsequently exacerbated with economic growth decelerating in the US, China and many major European markets as regulators prioritised controlling inflation and businesses struggled to overcome supply side constraints. Inevitably, this both dampened demand for exports from the ASEAN region and curtailed the bloc’s investment inflows. As a result, during the last six months of 2022, most ASEAN economies were having to contend with reduced export demand, an escalating cost of living and soaring import prices.

Despite such challenges, Kristalina Georgieva, Managing Director of the International Monetary Fund, believes the ASEAN region remains “a relative bright spot on a dark horizon”. Addressing delegates at the ASEAN summit in Cambodia in November last year, she said: “ASEAN is projected to grow at a rate of 5% this year and 4.7% next year, well above the global average.”

Underpinning much of that growth is the region’s commitment to trade, as well as its increasing economic integration. Notably, in January last year, the Regional Comprehensive Economic Partnership (RCEP) came into effect, the world’s largest free trade agreement (FTA) by population with some 31% of global GDP falling within its remit. In addition to all bloc members, Australia, China, Japan, South Korea and New Zealand are also signatories to the agreement.

In addition, several ASEAN nations signed or activated a number of bilateral FTAs during 2022. Many also invested heavily in improving their trading infrastructure, particularly with regard to port and logistics capacity, while time‑saving digital customs clearance / logistics procedures were also widely introduced.

The extent to which individual ASEAN economies have been adversely affected by global developments has, of course, varied in line with their pre‑existing strengths and vulnerabilities. This is clearly evident from a quick review of how the economies of the larger bloc members have fared over the past 12 months.

Cambodia

For the first half of 2022, Cambodia enjoyed a steady acceleration of its export growth rate, a development driven by its textiles and garments sectors, which together account for 70% of its total exports. This peaked in July, with export growth then declining significantly. Imports also rose strongly in the first half of the year, driven in large part by high oil costs, but these also declined in the post‑August period. The country has, however, managed to control its inflation, which peaked in June at 7.2% before falling to 4.4% in September. Taking all of this into account, the World Bank has raised its 2022 GDP growth forecast for the country to 4.8%.

Singapore

Singapore’s GDP grew by an impressive 4.1% year‑on‑year in the first half of 2022, largely on account of the robust performance of its service sectors and rising manufacturing output. Overall, its service sectors recorded growth of 4.8%, with information technology, real estate and tourism the three leading contributors. From June onwards, however, there was a significant slowdown as growth stalled for the country’s major trading partners and inflationary pressures mounted domestically, with the Monetary Authority of Singapore estimating the overall rate for the year as likely to be some 6%. As investment has also declined, Singapore’s Ministry of Trade and Industry is estimating an overall GDP growth rate of about 3.5% for 2022.

Indonesia

With global commodity prices rising due to the ongoing Russia‑Ukraine conflict, Indonesia enjoyed something of an export revenue windfall. This saw its GDP grow by 5.2% in the first half of 2022, the fastest pace since the second half of 2013. The easing of its Covid-19 mobility restrictions early in the year also stimulated spending in its transportation, restaurant and hotel sectors. The second half of the year, though, proved more challenging, with rising inflation triggering a slump in both import and export levels, while high interest rates and a slowdown in many of its major markets (notably China) hobbled trading activity. On the upside, local inflation has now eased off, with November’s rate falling to 5.42%, a three‑month low.

Malaysia

Malaysia managed strong growth in the first half of 2022, recording a 6.9% year‑on‑year rise. As this was not sustained in the third and fourth quarters, the Asian Development Bank (ADB) has since estimated that the growth figure for the year as a whole will be about 6%. In more specific terms, private consumption grew by 11.5% in the first half, with restaurants, hotels and recreation services doing particularly well. Investment growth, however, declined to 2.9% during the same period, falling from 5.5% a year earlier. Overall, trade performance has also been mixed, with export growth in the first half declining to 9.2% from 23.3% a year earlier, largely on account of diminished demand from China, Singapore and the US, Malaysia’s largest trading partners. More positively, demand for electronics and electrical products, which comprise more than a third of the country’s total exports, has risen by about 30%, while higher international oil, fats and base metals prices have benefitted Malaysia’s commodity exports.

The Philippines

Economic recovery in the Philippines accelerated in the first half of 2022, with GDP rising by 7.8% from 3.9% for the same period in 2021. Household consumption was notably robust, with spending on recreation, travel and restaurants all bouncing back. In addition, unemployment was down, while remittances from Filipinos working overseas were up by 2.8% year‑on‑year, with a favourable exchange rate bolstering household spending. Over the same period, investment and import levels also rose steeply. They did, however, ease in September, falling to a 14.1% year‑on‑year increase of US$11.98 billion. By comparison, exports only managed 7% growth for the same period, with electronic products – typically accounting for about half of the country’s total exports – particularly badly affected. With its year‑end inflation rate predicted to be just shy of 5%, the ADB’s current estimate is that the country’s 2022 GDP growth will be some 6.5% overall.

Thailand

Although Thailand’s economic activity showed substantial signs of recovery in the first half of 2022, the impact of the Russia‑Ukraine conflict on import prices, inflationary pressures and the fall‑off in global economic activity saw both its export and domestic investment levels decline during the second half, with consumer spending also tailing off over the same period. In addition, the prolonged disruption to many of its supply chains adversely impacted its manufacturing base. Despite this, its overall level of goods and services exports rose by 10.2%, with demand for agricultural items particularly strong. The first six months of the year also saw an increase in its exports of computer parts and accessories, electrical appliance parts, metal, machinery, and chemical and petrochemical products. Service exports climbed by 43.2%, largely on account of the resumption of international tourism, but have since declined. Inflation is now declining and expected to fall somewhere between 5% and 5.5% for the year as a whole. The ADB, however, has estimated that the country’s 2022 GDP growth will be a relatively moderate 2.9%.

Vietnam

Viet Nam’s economy bounced back strongly in the first half of 2022, with its GDP growth recorded as 6.4%. Activity was particularly robust with regard to retail sales, which were up 65.9% year‑on‑year in August, with the corresponding figure for the first eight months of 2022 charting a 20.6% rise. Export growth largely held up in the second half of the year, with the 29.18% recorded for October representing only a relatively minor month‑on‑month decline. Import growth also moderated, dropping to 28.4% in November, down from its year‑high of 32.66% in March. While its overall GDP growth rate for the year is expected to be a relatively impressive 6.5%, it still has to contend with rising inflation, which reached 4.37% year‑on‑year in November, its highest level since March 2020.