Boom and bust: ASEAN rises, China and India falter

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Shopping mall in Bangkok: Growing consumer spending boosts Southeast Asian economies

With slowing growth in China and India, all eyes are now on emerging Southeast Asia. While the two big billion-plus population economies are increasingly struggling to keep their pace of growth, Southeast Asia is showing resilience not only towards these two large trading partners, but also towards the EU debt crisis and global economic volatilities in general.

The commodity boom in Southeast Asia is continuing, foreign investment is pouring in on growing confidence in the region’s economic strength, and government-driven infrastructure spending in most of the 10 ASEAN nations shows no sign of easing due to low interest rates and strong currencies.

More than that, Southeast Asia is currently regarded as a safe haven even in the long term, with the ASEAN Economic Community (AEC) in the pipeline and a 600 million people market with steadily increasing consumer needs on the top of a $2 trillion combined economy.

Asset inflows into Southeast Asia are also much more stable than into China and India, where global investors are stepping on the brakes. There are many signs that asset managers are currently redirecting their funds from the big boys towards the smaller tiger economies of Thailand, Malaysia, Indonesia and even Cambodia.

Growth forecasts by global analysts speak for themselves: China’s GDP growth is tumbling from formerly double-digit percentage figures to below 7 per cent, India is down to around 6 per cent, and former investors’ darling Brazil made a landing at a two per cent growth forecast for 2012.

In turn, Southeast Asia boasts a rising GDP growth curve: Indonesia is set to grow 6.5 percent this year, the Philippine economy reported 6.4 percent growth in the first quarter, its fastest in one and a half years, Thailand’s central bank recently set its growth forecast to 6 per cent, and Indonesia’s forecast stands at 6.5 per cent.

The Asian Development Bank’s latest forecast for the entire developing Asia region for 2012 is 6.6 per cent and 7.1 per cent for 2013 . The bank said that ‘healthy growth’ in the Philippines, growing consumer demand in Indonesia, along with Thailand’s recovery, were combining to support the Southeast Asian region.

In Singapore, companies are benefiting from the booming tourism industry and strong retail consumption as the city-state slowly transforms itself from a regional trade and financial centre into a place for both work and play. Vietnam’s stock exchange has been among the world’s best performing in the first half of 2012, and subdued personal loan interest rates in many ASEAN countries give additional spending firepower to the fast-growing middle class.

However, analysts warn that rising wealth and booming businesses in ASEAN countries need to be accompanied by regulatory reforms and political changes in many of the countries to make growth sustainable. There also needs to be more convergence between the economies if they want to succeed in a common AEC market from 2015 onwards, the analysts said.

 

 

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Reading Time: 2 minutes

Shopping mall in Bangkok: Growing consumer spending boosts Southeast Asian economies

With slowing growth in China and India, all eyes are now on emerging Southeast Asia. While the two big billion-plus population economies are increasingly struggling to keep their pace of growth, Southeast Asia is showing resilience not only towards these two large trading partners, but also towards the EU debt crisis and global economic volatilities in general.

Reading Time: 2 minutes

Shopping mall in Bangkok: Growing consumer spending boosts Southeast Asian economies

With slowing growth in China and India, all eyes are now on emerging Southeast Asia. While the two big billion-plus population economies are increasingly struggling to keep their pace of growth, Southeast Asia is showing resilience not only towards these two large trading partners, but also towards the EU debt crisis and global economic volatilities in general.

The commodity boom in Southeast Asia is continuing, foreign investment is pouring in on growing confidence in the region’s economic strength, and government-driven infrastructure spending in most of the 10 ASEAN nations shows no sign of easing due to low interest rates and strong currencies.

More than that, Southeast Asia is currently regarded as a safe haven even in the long term, with the ASEAN Economic Community (AEC) in the pipeline and a 600 million people market with steadily increasing consumer needs on the top of a $2 trillion combined economy.

Asset inflows into Southeast Asia are also much more stable than into China and India, where global investors are stepping on the brakes. There are many signs that asset managers are currently redirecting their funds from the big boys towards the smaller tiger economies of Thailand, Malaysia, Indonesia and even Cambodia.

Growth forecasts by global analysts speak for themselves: China’s GDP growth is tumbling from formerly double-digit percentage figures to below 7 per cent, India is down to around 6 per cent, and former investors’ darling Brazil made a landing at a two per cent growth forecast for 2012.

In turn, Southeast Asia boasts a rising GDP growth curve: Indonesia is set to grow 6.5 percent this year, the Philippine economy reported 6.4 percent growth in the first quarter, its fastest in one and a half years, Thailand’s central bank recently set its growth forecast to 6 per cent, and Indonesia’s forecast stands at 6.5 per cent.

The Asian Development Bank’s latest forecast for the entire developing Asia region for 2012 is 6.6 per cent and 7.1 per cent for 2013 . The bank said that ‘healthy growth’ in the Philippines, growing consumer demand in Indonesia, along with Thailand’s recovery, were combining to support the Southeast Asian region.

In Singapore, companies are benefiting from the booming tourism industry and strong retail consumption as the city-state slowly transforms itself from a regional trade and financial centre into a place for both work and play. Vietnam’s stock exchange has been among the world’s best performing in the first half of 2012, and subdued personal loan interest rates in many ASEAN countries give additional spending firepower to the fast-growing middle class.

However, analysts warn that rising wealth and booming businesses in ASEAN countries need to be accompanied by regulatory reforms and political changes in many of the countries to make growth sustainable. There also needs to be more convergence between the economies if they want to succeed in a common AEC market from 2015 onwards, the analysts said.

 

 

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