ASEAN-GCC summit deepens trade and climate co-operation

What’s happened?

On October 20th 2023 the first ASEAN-Gulf Co‑operation Council (GCC) summit was held in Riyadh (Saudi Arabia), with top leaders from both blocs in attendance. This marks the first ASEAN-GCC summit since the two organisations established relations in 1990. The summit highlights the commitment of both regions to move beyond bilateral partnerships and to establish stronger strategic alignment at the regional level, in areas including sustainability, digital economy and security.

Why does it matter?

The inaugural ASEAN-GCC summit offered a platform for both regions to play complementary roles in deepening trade and addressing climate change. The Gulf states’ accession to ASEAN’s Treaty of Amity and Co‑operation of South‑east Asia in 2023 paved the way for inter-regional co‑operation. Two‑way trade between the regions has been dormant, barely increasing from US$77.9bn in 2010 to US$85.2bn in 2021, leaving much room for further expansion.

As the US has reduced its dependence on oil from the Middle East, hastened by its diversification toward renewable energy, ASEAN and East Asia have become primary markets for the Gulf’s hydrocarbons. Demand for energy in ASEAN is expected to rise as the region continues to expand its manufacturing capacity. Both groupings are also projected to be among the worst hit by climate change, incentivising them to explore and develop low‑carbon technologies. Furthermore, GCC’s financial investments can expedite the development of the ASEAN regional power grid. Both regions are promoting investment in renewable energy, which could lead to more co‑operation on developments in the sector.

The summit comes amid the ongoing Israel-Hamas conflict in the GCC’s immediate neighbourhood. ASEAN as a bloc exhibited a neutral stance on the conflict, showing sensitivity to its Muslim-majority member states, such as Indonesia and Malaysia. ASEAN and GCC arrived at a joint statement condemning all attacks against civilians and urging all parties in the conflict to abide by international humanitarian law, with the eventual realisation of a two-state solution. 

What next?

During the ASEAN-GCC Summit, the Malaysian prime minister, Anwar Ibrahim, suggested the possibility of a free-trade agreement (FTA) between ASEAN and the GCC. Although ASEAN is the base for a comprehensive set of FTAs, the Gulf states are not party to any of these agreements, despite their strong interest. Closer co‑operation between ASEAN and the GCC will support the growth outlook and strengthen energy security for both blocs in an increasingly challenging global environment. However, EIU expects this process to be protracted, given the diversity within and between both blocs. Malaysia will host the next ASEAN‑GCC summit in 2025.

The analysis and forecasts featured in this piece can be found in EIU’s Country Analysis service. This integrated solution provides unmatched global insights covering the economic, political and policy outlook for nearly 200 countries, helping organisations identify prospective opportunities and potential risks.