The EU-ASEAN trade corridor will grow faster in the next five years, following subdued growth in the past three years. The Europe recovery is likely to continue near-term - GDP growth is expected at 1.5% for 2015 and 2.1% for 2016, estimates Standard chartered. EU domestic demand is still about 3.5% lower in real terms compared with its peak in 2008. EU domestic demand will increase at a faster pace than GDP growth in the next three years, due to an investment pick-up and growth in consumption and expect a stable growth between now and 2020, says Standard Chartered.
"The EU-ASEAN trade corridor to grow at an average rate of 4-5% p.a. in the next five years, moreover, EU exports to ASEAN to grow at a slightly faster pace than imports from ASEAN, resulting in a mild narrowing of the EU's trade deficit, or even a small surplus. This should be supported by the ECB's likely accommodative monetary policy in the next five years, which should keep the trade-weighted euro (EUR) low by historical standards", according to Standard Chartered.
Easy monetary policy, combined with ongoing structural adjustments, should result in a more competitive European economy, supporting exports. ASEAN domestic demand will continue to grow as the region's middle class expands. The EUR's recent significant depreciation against all ASEAN currencies should support European exports to ASEAN.
