KUALA LUMPUR: Geopolitics, economic headwinds, and policy uncertainties are the three main risk factors confronting Asean, according to World Bank Senior Economist Aakash Mohpal.
Aakash noted that Asean countries, except for Indonesia, have recorded slower gross domestic product (GDP) growth compared to pre-pandemic levels.
He mentioned that the Gaza conflict has disrupted transportation, leading to longer shipping routes and a 40% increase in shipping costs.
The escalation of the conflict could impact the prices of essentials and exports from the Asean region.
Speaking at a panel discussion at the Asean Economic Opinion Leaders Conference: Outlook for 2025, Mohpal highlighted that slower growth in China has also affected economic growth in Asean.
"When growth in China slows down, growth in other developing economies, including Asean, slows down," he said during the panel session entitled "World Bank’s Economic Outlook for Asean" at Menara MITI on Thursday (Jan 9).
China, the world's second-largest economy, reported a 4.6% year-on-year GDP growth for the third quarter of 2024, its slowest since mid-2023.
"Finally, the last factor is policy uncertainties, where we see an increase in trade-distorting measures worldwide," Aakash said, adding that these measures include subsidies and tariffs, among others.
He suggested that "deeper" trade economies and domestic policies on economic reforms are needed to build resilience and insulate Asean and the East Asian region from these challenges.
