Home Globalisation & Geopolitics State of Southeast Asia amid global slowdown and geopolitical tensions

State of Southeast Asia amid global slowdown and geopolitical tensions

Southeast Asians continue to look to the US to do the right thing in the region

Over the past year, multiple risks emerged such as the Russia-Ukraine war and pandemic-induced global trade disruptions. These led to commodity shortages, price shocks and inflationary pressures. Increasing inflation forced central banks to raise interest rates, leading to tightening financial conditions. Meanwhile, China’s slowing growth—coupled with its troubled real estate sector—has created a ripple effect on economies far beyond its borders. .

Nevertheless, Southeast Asia remained resilient amid these global downturns. Asian Development Bank’s recent growth outlook estimated the region’s economic growth at 4.7% in 2023 and 5% in 2024, a clear improvement from the 3.5% growth registered in 2021.

Regional challenges

The recent 5th edition of The State of Southeast Asia survey reveals what Southeast Asians feel about the various geopolitical developments taking shape in the region and whom they regard as the region’s stable strategic partner.

The top three challenges that the region faces in 2023 are the impacts of increasing unemployment and economic recession, alongside increased military tensions in the South China Sea and the Indo-Pacific region and the daunting task of managing climate change.

Exhibit 1: The top three challenges for Southeast Asia

For most of the ASEAN economies, the effects of extreme climatic events due to changing global climate represents a major challenge in 2023, making the issue a major source of concern this year. Last year, on the other hand, majority of Southeast Asians sided with the COVID-19 pandemic being a major threat.

Southeast Asians also feel strongly about Russia’s unprovoked war on its neighbour Ukraine. Around 83% are concerned about Russia’s invasion of Ukraine, while 58.3% consider the increase in energy and food prices as the most serious impacts of the Russia-Ukraine conflict on the region.

Change in confidence

ASEAN leadership is also winning greater confidence among Southeast Asians in its ability to raise the baton for free global trade. In 2022, three out of ten Southeast Asians were most confident in the US to champion the agenda for global free trade. But this view has now slightly shifted in favour of the ASEAN, with 23.5% of Southeast Asians placing their confidence in the bloc to foster and promote the agenda for global free trade.

Exhibit 2: ASEAN leadership confident in championing global free trade agenda

Nevertheless, the US is still perceived by more Southeast Asians as the most reliable power for upholding the rules-based order and maintaining international law in the region and across the world..  The EU follows not far behind, with 23% of Southeast Asians signifying their confidence in the union’s ability to uphold the rules-based order.

Exhibit 3: The US confident upholder of the rules-based order

Taking sides

The popularity of the US has grown steadily among Southeast Asians. When asked to choose between the US or China, most Southeast Asians, i.e., 61.1% preferred to align themselves with the US, with only 38.9% choosing China. Two reasons have emerged as major problem areas that can significantly worsen China’s impression among Southeast Asians. The first is China’s growing economic dominance and political influence in their country as selected by 44.3%; and the other is China’s interference with their country’s domestic affairs, as selected by 38%.

Meanwhile, a larger share of Southeast Asians (54.2%) is confident that the US will “do the right thing” to contribute to global peace, security, prosperity and governance. Two factors feed into this growing trust in the US. The first as selected by 39.2% of Southeast Asians is America’s vast economic resources and its political will to provide global leadership; the other is American military power, which can be perceived as a strong asset in promoting global peace and security.

Exhibit 4: Confidence high in the US to do the right thing

Against the backdrop of the pandemic and ongoing geopolitical rivalries, the ASEAN bloc is increasingly choosing to align itself with those who will work for the betterment of peace, security and overall good in the region. These criteria will no doubt dictate their national and foreign policies moving forward. It is clear too that China’s growing economic influence coupled with its oft-criticised military tactics are proving to be a major concern for the region. If the survey results are any indication, Southeast Asians are looking to US leadership to balance the scales of power and peace in the region, cementing the Western power’s standing as a champion of Southeast Asia and its people.

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