Introduction

Summary

Economic growth in Southeast Asia was estimated at 6.1 per cent year on year compared with 6 per cent in 2006. This was due to better performance in Philippines, Indonesia and Malaysia while Vietnam sustained its impressive performance of 2006. Further, Singapore exceeded earlier expectations by growing only marginally slower than in 2006. Stronger than expected domestic demand and higher remittances for some countries contributed to the robust performance of Southeast Asian economies though exports also continued to play an important role. Yet, there were also growing concerns about the underlying competitiveness of some countries to meet longer-term economic challenges, with issues of governance, education and training at the forefront of these concerns.

The picture was more mixed in the arena of politics and security. Thailand had yet to recover its stability after the military coup of 19 September 2006, despite the election of December 2007. The political divisions in the country had, if anything, increased and the apparently failing health of the King only added to the currents of uncertainty. Meanwhile the insurgency in the southern Muslim provinces continued unabated with no solution in sight. In the Philippines, though President Gloria Macapagal Arroyo's presidency turned out to be politically resilient, it remained tarnished by a widespread perception of corruption among those close to her, while the country continued to face multiple insurgencies involving the communists and, in the south, different groups of Muslim rebels. In Malaysia there were growing signs of racial polarization and disappointment with the Abdullah administration's failure to deliver on its promises to reduce crime and corruption. The situation in Myanmar seemed worse with the September demonstrations led by Buddhist monks, which were violently suppressed. Yet, by the end of the year, nothing seemed to have changed. On the other hand, Indonesia, the largest country in Southeast Asia, had acquired a measure of stability and normalcy not seen since the financial crisis of 1997–98.