The Economic Outlook of Southeast Asia in years down the road

Qinthara Fasya | 18 November 2021

Loreal Jiles shares her insights on the Southeast Asian Economy in the next few years

Vice President, Research and Thought Leadership at IMA

The latest Global Economic Conditions Survey (GECS) by ACCA (the Association of Chartered Certified Accountants) and IMA® (Institute of Management Accountants) found that economic growth connected to pandemic recovery weakened in Q3 2021, with confidence falling most significantly in North America, while overall confidence and orders remain at high levels across regions.

This easing in the pace of global economic growth was expected after surges in growth post-lockdown and is expected to persist through the end of the year. This moderated pace is driven primarily by the emergence of the Delta variant along with supply shortages leading to higher prices and constrained output across multiple regions. DigitalCFO Asia spoke with Loreal Jiles, Vice President, Research and Thought Leadership at The Institute of Management Accountants (IMA) on the economical outlook of Southeast Asia and how it will regain the pre-pandemic level of activity.


Loreal states that while the Asia-Pacific market saw a slight decrease in overall economic activity and an increase in confidence, economic activity within the region remains above the pre-pandemic level of Q4 2019. Hence, it is anticipated that the economy will grow slowly but healthily in the next couple of months as the region recovers from the Delta variant, opening its borders slowly and cautiously. Demand in the region remains optimistic and should sustain steady overall growth in the coming months. But we are seeing strong underlying demand and we anticipate that these more economies will regain the pre-pandemic level of activity at the latest by early 2022.

The Lack of Momentum in Southeast Asia

The Delta variant has imposed restrictions in some regions and generated caution. In some countries, a drop in confidence is also observed. On the other hand, supply shortages, higher prices, and dysfunctional jobs markets have also contributed to the loss of momentum after an exceptionally strong rebound in global activity observed in the first half of this year.

Specifically, in Southeast Asia, the Delta variant has had the greatest effect on the economic outlook. Lockdowns in Indonesia, Thailand, and Vietnam in particular have taken their toll. The rapid spread of the Delta variant and low vaccination rate in emerging markets was compounded by the low natural immunity among the Southeast Asia population, resulting from relatively few COVID cases last year. These factors, among others, led to the Asian Development Bank cutting its 2021 GDP forecast for Southeast Asia to 3.1%, down from 4.4% from April 2021.

According to IMA’s recent GECS for Q3 2021, more than 70% of respondents are expecting higher inflation in the next five years. Additionally, we are also seeing an increasing trend in concern regarding operating costs, which means finance professionals such as management accountants and CFOs will have to factor higher inflation and the surge in commodity prices and transport costs into their budgeting and planning processes, support business decisions that account for uncertainty, and implement appropriate mitigations as part of enterprise risk management initiatives.

Technological Innovations to accelerate the global finance and accounting profession

Technology is reshaping the way finance and accounting teams deliver value globally. Beyond the advancements of technology, the profession also saw an increase in data accessibility and an acceleration in the pace of change in recent years; all of which serve as a catalyst for the profession’s transformation underway.

Innovations such as advanced analytics, intelligent automation, and workstream collaboration tools prepared the finance and accounting teams to be well-positioned in supporting their organizations through unprecedented times. Robotic process automation (RPA) improves the efficiency of tasks traditionally performed by some finance and accounting staff. For instance, accounts payable, accounts receivable, reconciliations, payroll, data entry, monthly close processes, and control testing are some of the accounting processes automated with RPA. Data visualization tools enhance the professions’ ability to derive insights from and communicate the story behind data. Artificial intelligence propels static forecasting and strategic planning processes toward agility and empowers more robust exploration of business scenarios and preparedness for the future.

Ultimately, digital technology facilitates the global finance and accounting profession’s transition from value preservation to value creation. IMA’s Virtual AsiaPac Conference on November 13, 2021 will hone in on the role of technological innovation in the finance and accounting profession as well as the importance of finance function agility in an organization’s success.

Achieving Net-Zero emissions with a smarter and faster finance team

Achieving net-zero emissions by 2050 is unlikely to happen without a multi-pronged approach. Some are evaluating more ambitious policies, such as carbon pricing, a straightforward tax raising the price to a certain level, or an emissions trading scheme, where the quantity of CO2 emissions is set, and permits are issued for this quantity. The need for a clear path to net-zero emissions underscores the importance of the UN Conference on Climate Change COP26 meeting. Over the next decade, it is necessary to scale up investment and reallocate away from fossil fuels and clean energy, something that the finance team must plan and budget for as we contribute to sustainable global economic development.

Sustainable finance, considering the environmental, social, and governance (ESG) factors of a project or initiative when making investment decisions, is becoming increasingly important. For instance, the public sector will have to play a crucial role in critical public infrastructure development and support measures for private investment, including R&D. It is estimated that an additional 0.5% to 4.5% of cumulative GDP will be required over the next decade for public investment. CFOs and the finance team will play an important role in evaluating these investments and factoring related estimates into their planning to achieve sustainability goals.

The private sector will also have to play a part in achieving net-zero emissions by 2050. In fact, private investment needs are estimated at about twice the level of public investment on average. In emerging markets, public investment has a bigger part to play in shifting to clean power from fossil fuel-based electricity generation. While in the advanced economies, public investment is likely to focus on electricity networks and storage, as well as “other end-use,” consisting mainly of electric vehicle infrastructure.

A public-private partnership is essential in achieving the net-zero goal by 2050. Government support and regulation is needed to facilitate progress in the private sector. The finance team will have to adjust planning processes, reporting activities, key performance indicators, and even internal controls based on industry and organizational focus for sustainability.