OECD forecast supports India plans for Southeast Asia
Southeast Asia is emerging resilient from the global economic turmoil and will grow at a "robust" average of 5.5 percent over the next five years, propelled by rising investment and domestic consumption, says the Organization for Economic Cooperation and Development (OECD).
The positive outlook underscores the Indian foreign policy objective of strengthening trade, investment and security ties with the region.
Prime Minister Manmohan Singh Tuesday hitched India's prosperity and security to Southeast Asia and said: "Our vision for this region is rooted in cooperation and integration."
"We have built an impressive agenda for economic cooperation and for addressing some of our common challenges," the prime minister said, addressing the seventh East Asia Summit in the Cambodian capital.
The Paris-based OECD's "Southeast Asian Outlook 2013" report said the European sovereign debt crisis and a slowdown in advanced economies such as the US have had a "limited" impact on the 10 economies of the region.
Brunei, Myanmar, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam, it said, would be insulated by a continuing shift to domestic demand, rather than exports, as the main driver of economic growth.
"Domestic demand growth, and particularly private consumption and investment, will be the main drivers of growth in most Asean countries. Growth will be less reliant on net exports than in the past. The expansion of the middle class is likely to continue to boost domestic demand," said OECD Deputy Secretary-General Rintaro Tamaki at the launch of the Outlook at the Asean Business Summit in Phnom Penh.
The report called for narrowing the development gap in the region focusing on disparities "among" and "within" Southeast Asian countries.
"To maintain economic growth in Southeast Asia and for the population to benefit from this growth, greater efforts are needed to reduce disparities between and within Asean countries. Enhancing productivity through structural policy reforms in particular will be the key to the success of the new development strategies in the region," said Mario Pezzini, director of the OECD Development Centre.
The OECD said a combination of cyclical factors, government policies, and longer-term shifts in economic structure that have supported consumption growth over the past several years are "likely to continue to underpin its growth over the medium term in Southeast Asia, China and India".