Impacts of Macroeconomic Factors on Economic Growth in ASEAN-5 Countries

Abstract:

This study examines the impact of macroeconomic factors on economic growth in ASEAN-5 countries from 1996 to 2024, using a balanced panel dataset of 145 observations. The Panel PMG-ARDL estimator is applied (140 observations after adjusting for lags and differencing), confirming a long-run cointegrating relationship. Given significant cross-sectional dependence, the CS-ARDL model is employed as a robustness check to account for common shocks. Results indicate that inflation negatively affects long-term growth, whereas trade openness and foreign direct investment serve as key drivers. Domestic investment contributes positively only in the short run. The real effective exchange rate exerts divergent effects: stimulating growth in the short run by lowering import costs but hampering it in the long run by weakening export competitiveness. The significant error correction term (ECT = -0.827) implies a high adjustment speed toward long-run equilibrium. These findings offer empirical insights for flexible exchange rate governance and effective inflation management to foster sustainable growth in ASEAN-5 economies.