The latest GDP figures out of Southeast Asia, as well as trade and PMI data, have painted an optimistic portrait for ASEAN nations at the start of the new year. Though these countries’ manufacturing industries struggled throughout the latter part of 2023, largely due to extensive ties with the softening Chinese economy, the prospect of increasing trade and diplomatic relations with western nations could help them overcome some of the uncertainty emanating from China.
Vietnam, in particular, has been vying for new status with the US government, establishing a comprehensive strategic partnership with Washington and appealing its status as a non-market economy. Vietnam is seen as a top target for billions of Dollars of investments from a number of US firms and could soon break off a sizeable portion of funding included in the US CHIPS Act to boost semiconductor production.
Related ETFs: Global X FTSE Southeast Asia ETF (ASEA), VanEck Vietnam ETF (VNM)
New GDP data shows the Philippines was the Association of Southeast Asian Nations’ (ASEAN) fastest growing economy in 2023, surpassing Malaysia and Vietnam, which took second and third place among the bloc’s members, respectively. All three of these economies expanded by more than 5.0% in the full year period. S&P Global’s manufacturing purchasing managers’ index (PMI), for ASEAN increased to 50.3 in January from 49.7 in December, rising above the breakeven mark of 50 for the first time in five months. Though the ASEAN union is made up of 10 member states, S&P’s gauge captures data from manufacturers in Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
A period of collective contraction in these countries’ manufacturing activity was likely related to emergent softness in China’s economy. As MRP noted earlier in the week, World Bank data indicates China is a particularly critical economic driver of many other emerging market nations in Asia. In particular, China is the top trade partner of Vietnam, Singapore, Malaysia, and others. Though Beijing continues to face a bevy of political and economic headwinds, southeast Asia could…
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