Understanding the Relationship of Energy Consumption and Economic Determinants in ASEAN-5 Countries

Abstract

The study examines the relationships between energy consumption and a range of key economic determinants within the ASEAN-5 countries spanning four decades from 1980 to 2020. Utilizing robust regression analysis, it explores the complex dynamics linking energy consumption to economic growth, inflation rate, financial development, and total population in these Southeast Asian nations. The findings consistently underscore the presence of positive relationships between energy consumption and the key variables across the ASEAN-5 region, with a particularly strong correlation between energy usage and GDP. However, the impact of economic growth on energy consumption varies significantly, notably exemplified by Indonesia, where a unique negative correlation challenges conventional wisdom. While inflation rates exhibit a positive relationship with energy consumption, their influence is eclipsed by other contributing factors. Financial development emerges as a pivotal driver of heightened energy consumption, aligning with established literature, while total population's impact fluctuates, proving positive in Malaysia and Indonesia but negative in the Philippines, Thailand, and Singapore. Ultimately, these nuanced findings underscore the need for comprehensive and individually tailored energy policies that align with the distinct dynamics of each ASEAN-5 country, fostering sustainable economic growth while mitigating the environmental impact of increased energy consumption.