With more than 600 million people, a booming middle class and the world’s third largest young labour force, Asean is set to be an important node in the global market.

Penang Institute executive director Zairil Khir Johari said Asean is the seventh largest economy in the world, with a combined gross domestic product (GDP) of US$2.4 trillion in 2013.

At current growth trends, it is set to become the fourth largest economy by 2050, added the DAP Bukit Bendera parliamentarian.

"However, global trade is now slowing down due to various reasons, and the situation will certainly not be helped by the rise in terror attacks around the world and the increasing saliency of isolationism over globalism," said Zairil, during his speech at the Penang in the World Conference on Jalan Brown today.

"Divisive rhetoric such as those espoused by Republican presidential nominee Donald Trump have become the new normal, while ultranationalist parties are gaining ground in Europe," he noted.

"Britain’s shocking Brexit from the European Union can be seen as a manifestation of this xenophobic, anti-globalist movement.

"Certainly, all these factors would produce more uncertainty in the world, not least of all in trade-dependent Asean, " he cautioned.

Zairil said besides these externalities, Southeast Asian economies also face internal pressures.

Caught in the middle-income trap, many countries, Malaysia included, are struggling to cope with the rapidly changing business environment, he added.

These include how disruptive technologies challenge traditional business models, he said.

"At the same time, widening inequality, political instability and rampant corruption continues to haunt many economies in this region."

Zairil said "Penang in The World Conference" will also tackle some key domestic issues, such as the generational transition that is occurring within Malaysia.

With over 70 percent of the population below the age of 40 and more than a third below the age of 20, Malaysia is set to reap a “demographic dividend” over the next decade or so.

"However, our youth are faced with many problems, such as the vicious cycle that begins with a lacklustre education system, producing underemployment, unemployment, low wages and high debt levels, " he said.