ASEAN Urged To Refocus Export Market

KUALA LUMPUR, Nov 27 (Bernama) -- ASEAN countries must refocus its export market and diversify away from raw materials for long-term growth, said Centre of Economic and Business Research Senior Economist, Danae Kyriakopoulou. Kyriakopoulou said ASEAN has historically powered its economic growth mainly through the export of raw materials but now faced challenges that posed risks to its economic performance. "The challenges include low commodity prices, China's economic slowdown, weak world trade, uncertainty over US interest rate and subdued growth of major export markets," she said at a media briefing on the Q4 Economic Insight Report 2015 here Thursday. The briefing was organised by the Institute of Chartered Accountants in England and Wales. She said the region's ties with the Chinese economy was causing other economies to be vulnerable to currency and capital outflows. "ASEAN economies have choices. They can move towards a different economy as a whole, not to be dependent on China and export different kind of products that the new growing China will demand. "China moved away from just consuming commodities and turn them into manufactured products but is still looking for more higher-end manufactured products," she said, adding that China's economic slowdown was expected to continue as monitored by economists. Kyriakopoulou said as the global trade remained subdued and expected to record slower growth, ASEAN, as a relatively trade-dependent economy, would be at risk in terms of performance in the coming years, especially in developing the growth for trade. She said the ASEAN Economic Community was the way forward and focus should be on regional trade which could offset the risk that the region suffered from the Chinese slowdown. As for the commodities, Kyriakopoulou said, the prices were expected to rebound in long run. However, they would be lower than the pre-crisis level with crude oil prices to be between US$60 and US$70 a barrel, at the end of the decade. "Diversification of these economies away from raw materials is essential as commodity prices are likely to remain subdued. These diversification could lead to greater opportunity of product differentiation and lower volatility in export earnings. "Now is the the time for these economies to move towards knowledge industries, higher skills manufacturing and services. "Malaysia is the highest among the transition economies. It is moving towards more innovation-driven economy to achieve its high-income nation target by 2020," she said. -- BERNAMA