SINGAPORE (Dec 4): It’s been a good year for the Association of Southeast Asian Nations as it celebrated its 50th anniversary in style and enjoyed an upside surprise to economic growth. In the past month, a series of political conclaves saw the high and mighty of global politics presenting themselves at Asean-sponsored summits, in seeming recognition of Asean’s centrality in regional affairs. Geopolitical risks within the region appeared to have abated as the world’s attention shifted northwards to the Korean peninsula where North Korea’s nuclear and missile tests proved to be far more alarming than any problems the Asean region faced.

Is Asean really on a sustained upswing? We believe that, 20 years after its terrible crisis, Asean has a chance to once again establish itself as one of the premier poles of economic excellence in the world. It can even regain its position as one of the most popular destinations for foreign investment. However, while the economic fundamentals are, on balance, supportive, it is not clear whether the potential political obstacles can be overcome — which means that, unless Asean political leaderships get their acts together, the region’s chance for glory might be missed.

Big cyclical uptick underway in region
There is little doubt that the Asean economies are strengthening. Recent data on 3Q economic growth was exhilarating, with most countries reporting faster-than-expected growth rates, which were at multi-year highs. Countries most exposed to global demand, such as Thailand, Vietnam, Malaysia and Singapore, led the pack, but the Philippines is also generating strong growth of close to 7% while Indonesia appears to be gradually putting a bad patch behind it and seeing growth north of 5%. Encouragingly, where lead indicators are available, they point to a sustained improvement.

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