SCB EIC forecasts that the CLMV economy will continue to expand in 2024, driven by the recovery of exports and tourism, which will support improved adjustments through the labor market recovery.
Key Takeaways
- The economies of CLMV countries are expected to expand in 2024, driven by the recovery of exports, tourism, and labor markets, but they still face challenges such as high non-performing loan ratios and risks associated with geopolitical tensions.
- The economic recovery varies across CLMV countries, with Laos facing risks from high public debt levels and currency depreciation, while Myanmar is affected by political instability and a weakened external sector.
- Trade and investment between Thailand and CLMV countries are expected to improve in 2024, supported by global trade recovery and improved economic conditions, but the pace of recovery will depend on the stability of the economies in the CLMV region.
The SCB EIC projects that the economies of CLMV countries will continue to expand in 2024 due to the recovery of exports and tourism, leading to improved economic conditions and labor market recovery.
However, these economies still face challenges such as the impact of the slowdown in the Chinese economy, high non-performing loan ratios in some countries, and potential trade disruptions due to regional transportation issues.
Unequal economic recoveries
The pace of economic recovery varies among the CLMV countries, influenced by factors such as political stability and financial conditions. Additionally, the value of CLMV currencies may face downward pressure, and the outlook for trade and investment between Thailand and CLMV countries is improving, supported by global trade conditions and economic recovery in the region.
In 2024, SCB EIC anticipates GDP growth of 6.0% in Cambodia (up from 5.6% in 2023), 4.7% in Lao PDR (from 4.5%), 3.0% in Myanmar (from 2.5%), and 6.3% in Vietnam (from 5.1%).
In the medium term, the CLMV economy is expected to benefit from the relocation of international businesses’ production bases to other countries in the region under the “China +1” strategy to reduce higher geopolitical risks, which will be a positive factor for future foreign direct investment.
CLMV-Thailand trade and investment
In 2024, CLMV-Thailand trade and investment are expected to recover due to improving global trade, especially in the manufacturing sector, and regional economic recovery. Global and Thailand’s financial conditions are anticipated to ease, facilitating Thailand’s outward direct investments in the CLMV region. However, the investment rebound may be moderate due to economic instability in some CLMV nations. Despite this, SCB EIC maintains a positive long-term outlook for CLMV economies, as it remains a high-growth region with a young workforce, free trade agreements, and a strategic location connecting to major markets like China and India.
