Looking East: Resilience, your name is ASEAN

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When looking for new success stories in today’s global business environment, it is hard not to notice the remarkable resilience that Southeast Asia, and especially the ten ASEAN nations, are currently showing. And this is not just an observation that can be made when strolling through glitzy shopping arcades or busy office building lobbies in Bangkok, Kala Lumpur, Manila or Jakarta. No, it’s based on objective findings of the most reputable international organisations.

By Arno Maierbrugger

The Organisation for Economic Co-operation and Development (OECD) said in a report released at the 21st ASEAN Summit in November in Phnom Penh that Southeast Asian countries, including some weaker one such as Vietnam and the Philippines, are emerging resilient from a period of global turmoil, with rising investment and domestic consumption that will propel growth in coming years. All the ASEAN member nations – except saturated Singapore – will reach GDP growth figures above 5 per cent in 2013, the OECD predicts, with Indonesia’s growth being the highest at an average of 6.4 per cent.

In comparison, the latest 2013 growth forecast for the eurozone by the European Central Bank was -0.3 per cent, in fact a contraction. The US will grow a meager 2.1 per cent next year, says the Washington-based National Association for Business Economics. Japan will see small growth between 0.5 and 1 per cent, banking giant Nomura said in a recent forecast even after the election-winning conservatives pledged to do everything to stimulate the economy. Latin America’s growth forecast stands at an average 3.7 per cent, according to the UN Economic Commission for Latin America and the Caribbean, and average growth in the GCC will slow from 5.5 per cent in 2012 and to 3.73 per cent in 2013, mostly due to a tapering off of oil production, says the International Monetary Fund.

Although still on a high level, the growth curves in India and China are continuously pointing downwards. China’s GDP growth is down from double-digit figures seen in the years before to some 8 per cent predicted for 2013, and India’s government has just recently revised the growth forecast for its fiscal year 2013 from 6.7 to 5.7 per cent due to expected weak exports and lethargic global demand.

By contrast, ASEAN’s robust domestic demand will continue to mitigate the negative effects of weak exports, economists say. Higher public spending on social safety, healthcare and infrastructure, as well as young populations with rising wages are supporting domestic demand, which is expected to sustain over the next several years, with fiscal deficits narrowing and industrial productivity improving.

The ASEAN economic parameters, in particular future growth prospects, are currently much more favourable than elsewhere in the world, and investors would be ignorant not to try monetising on them.

This comment is Inside investor’s weekly contribution to Qatar’s leading newspaper Gulf Times and is published every Sunday.

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Reading Time: 2 minutes

When looking for new success stories in today’s global business environment, it is hard not to notice the remarkable resilience that Southeast Asia, and especially the ten ASEAN nations, are currently showing. And this is not just an observation that can be made when strolling through glitzy shopping arcades or busy office building lobbies in Bangkok, Kala Lumpur, Manila or Jakarta. No, it’s based on objective findings of the most reputable international organisations.

Reading Time: 2 minutes

When looking for new success stories in today’s global business environment, it is hard not to notice the remarkable resilience that Southeast Asia, and especially the ten ASEAN nations, are currently showing. And this is not just an observation that can be made when strolling through glitzy shopping arcades or busy office building lobbies in Bangkok, Kala Lumpur, Manila or Jakarta. No, it’s based on objective findings of the most reputable international organisations.

By Arno Maierbrugger

The Organisation for Economic Co-operation and Development (OECD) said in a report released at the 21st ASEAN Summit in November in Phnom Penh that Southeast Asian countries, including some weaker one such as Vietnam and the Philippines, are emerging resilient from a period of global turmoil, with rising investment and domestic consumption that will propel growth in coming years. All the ASEAN member nations – except saturated Singapore – will reach GDP growth figures above 5 per cent in 2013, the OECD predicts, with Indonesia’s growth being the highest at an average of 6.4 per cent.

In comparison, the latest 2013 growth forecast for the eurozone by the European Central Bank was -0.3 per cent, in fact a contraction. The US will grow a meager 2.1 per cent next year, says the Washington-based National Association for Business Economics. Japan will see small growth between 0.5 and 1 per cent, banking giant Nomura said in a recent forecast even after the election-winning conservatives pledged to do everything to stimulate the economy. Latin America’s growth forecast stands at an average 3.7 per cent, according to the UN Economic Commission for Latin America and the Caribbean, and average growth in the GCC will slow from 5.5 per cent in 2012 and to 3.73 per cent in 2013, mostly due to a tapering off of oil production, says the International Monetary Fund.

Although still on a high level, the growth curves in India and China are continuously pointing downwards. China’s GDP growth is down from double-digit figures seen in the years before to some 8 per cent predicted for 2013, and India’s government has just recently revised the growth forecast for its fiscal year 2013 from 6.7 to 5.7 per cent due to expected weak exports and lethargic global demand.

By contrast, ASEAN’s robust domestic demand will continue to mitigate the negative effects of weak exports, economists say. Higher public spending on social safety, healthcare and infrastructure, as well as young populations with rising wages are supporting domestic demand, which is expected to sustain over the next several years, with fiscal deficits narrowing and industrial productivity improving.

The ASEAN economic parameters, in particular future growth prospects, are currently much more favourable than elsewhere in the world, and investors would be ignorant not to try monetising on them.

This comment is Inside investor’s weekly contribution to Qatar’s leading newspaper Gulf Times and is published every Sunday.

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