KUALA LUMPUR: The ASEAN+3 Macroeconomic Research Office (AMRO) has upheld its 4.5 per cent growth projection for the region in 2024 supported by resilient domestic demand and external sector.
Its chief economist Dr. Hoe Ee Khor said that robust local demand, coupled with a slowdown in inflation and ongoing improvement in trade, will drive economic expansion, even in the face of uncertain global conditions.
Robust domestic demand continued to anchor the region's growth, supported by the improving external sector.
Hoe said other growth drivers included the gradual recovery of China's property sector and the anticipated return of tourism to pre-pandemic levels.
"We are quite confident that growth this year will be driven by domestic spending and stronger exports," he told the media in a virtual media briefing in a January quarterly update of the ASEAN+3 Regional Economic Outlook (AMRO).
Nevertheless, the moderation of growth in the US and the Europe area is likely to limit the extent of the improvement in regional exports.
According to the quarterly report, the ongoing recovery of the travel industry kept retail sales and services spending strong.As investment approvals increase, investment activity of Asean economies also picked up pace, said the report. AMRO's report also said that economic activities in China appeared to be stabilising, with industrial production rebounding to expand at the fastest rate since February 2022 and the services sector growing in Q4 2023.
Private consumption in Asia's largest economy remained robust, with retail spending strengthening.
The report said it expects additional policy support for infrastructure investment to bolster China's near-term growth momentum.
Adverse spillovers from the run-up to the US presidential election in November as a new risk that could impact baseline forecasts.
Hoe also said that heated populist debates during the election campaigning in the US could set off stronger protectionist sentiments and measures, resulting in turbulent financial markets.
"The lead-up to the US election in late 2024 could exacerbate policy uncertainty and volatility in financial markets," he added.
Other threats included a spike in global commodity prices, a recession in the US and Europe, and weaker economic growth in China.
Hoe said in the medium term, geopolitical tensions between the world's two major powers, China and the US, continue to be the main risk factor for the Asean+3 region.