The Economic Outlook for Southeast Asia, China and India is an annual publication on Asia’s regional economic growth, development and regional integration process. It focuses on the economic conditions of the Association of Southeast Asian Nations (ASEAN) member countries (Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Viet Nam) and two large economies in the region, China and India. This Outlook evolved from the Southeast Asian Economic Outlook.

The 2014 edition of the Economic Outlook for Southeast Asia, China and India: Beyond the Middle-Income Trap was prepared by the Asia Desk of the OECD Development Centre in Paris, in co-operation with the ASEAN Secretariat in Jakarta.

Countries in the Emerging Asian region - over-dependent on export-led growth in the past - are now rebalancing their economies towards domestic demand as part of a deliberately engineered shift in their growth and development strategies. Indeed, many Emerging Asian economies continue to post impressive growth, and the region’s investment prospects look strong.

Despite growth moderating in 2013, Emerging Asia (Southeast Asia, China and India) will continue to play an important role in global economic growth over the medium term. The outlook in the region remains resilient, although the pace of growth is forecast to moderate compared to before the global financial crisis (2000-07).

The economic outlook in Emerging Asia (Southeast Asia, China and India) remains robust over the medium term, anchored by the steady rise in domestic demand.

The economic outlook in Emerging Asia (Southeast Asia, China and India) remains robust over the medium term, anchored by the steady rise in domestic demand. In particular, real GDP growth in the Southeast Asian region will remain robust in the medium term, growing at a pace which is comparable to the pre-global financial crisis period. Growth in domestic demand, particularly private consumption and investment, will be the main driver of growth in most countries. Current account surpluses will remain relatively stable as shares of GDP in the region. Growth will be less reliant on net exports than in the past. In the near term, while downside risks to growth remain, particularly from financial volatility and capital flows, Emerging Asian economies will weather this as underlying fundamentals are resilient.

While the Emerging Asian region has positioned itself well to weather short-term economic volatility, it is imperative to ensure that the new growth and development strategies of countries in the region do lead to sustainable growth over the longer term. To this end, there must be structural policy reforms to ensure sustained and robust productivity growth, the cornerstone of every nation’s economic growth and competitiveness. The reforms should also target upgrading of economic activities to ensure that the region’s economies can remain competitive participants in global value chains in the face of changing domestic and external conditions.

The Emerging Asia region has made tremendous economic progress over the past four decades. Some developing countries – in particular China, India, Indonesia, the Philippines, Thailand and Viet Nam – are now within the middle income group of countries as defined by the World Bank. All these countries can aspire to join Japan, Korea, Chinese Taipei and Singapore in the ranks of high-income, advanced, economies within the next several decades, in some cases within the next one or two decades. However, they will need to overcome difficult challenges to grow beyond the “middle-income trap”.