STRONG CONSUMER DEMAND EYED BY SOUTH EAST NATIONS TO COMPETE WITH ASEAN TIGERS ‘ INDIA’ & ‘CHINA’.

DATE:2 April 2007

South East Asean economies are expected to grow at around 6% in 2007 as compared to 5.8% last year, thanks to identification of new markets and increased sales in Middle East and within Asean, despite of falling exports to US, Europe and Japan. World Bank and ADB expect the world trade to grow by around 7.5-8% in 2007 as compared to 9.8% in 2006. Asean economies are trying to strike a balance between their growths by trying to boost their domestic demand to compensate for slowing exports demand. The Asean economies are twice more reliant on exports as compared to their counterparts, especially on developed markets like Japan, US, Europe. They can be seen concentrating on improving the trade relations amongst themselves. The trade amongst Asean nations has reached $300 billion mark and constitutes more than quarter of the total Asean trade which stands at $1.44 trillion. Moreover with rising crude prices, the Middle East nations have experienced an increase in income, which can be translated into an increased opportunity of exports to these nations. The same trend can also be seen happening in China where the Government has recently renamed its International Export Fair as International Import and Export Fair, the focus of the Asean nations is to increase the volume of imports and exports amongst themselves to pick up the upcoming slack. Markets like – Abu Dhabi, Qatar, Dubai, Kuwait and Saudi Arabia are cash rich markets and have tremendous potential. However the facts that the economies dependent on exports to US will see their sales declining very rapidly in the current year can’t be declined. Some of the factors dampening the growth are increase in crude prices which may compel the central banks to hike interest rates, as a result the investment and consumer demand may suffer. Moreover an avian disaster may also seriously cause harm to growing tourism in the economies. Asean economies need to improve their resistance towards terrorism and other environmental disease otherwise there will be run on confidence. Investments in these south east nations have declined since financial crisis in 1997-98, but gradually they are on a rise and were estimated to be $40 billion in 2006 and are expected to grow by 15% in the current year. However these nations will have to match their performance to strong Asean economies India and China, because of their huge attractive markets size. So the south east nations have to boost their domestic demand to attract investments and to maintain their growth rate.