However, consider Asia’s formidable strengths and attractions. The 21 member economies of APEC (or Asia Pacific Economic Co-operation) account for more than one third of the world’s population (2.75 billion people), about 55% of world GDP ($19,25bn) and about 49% of world trade.
Asia’s large populations mean big markets. The people have a relatively high propensity to save, with a premium placed on education, resulting in a high savings rate and an increasingly educated labour force.
Asia’s economies still provide a low-cost resource and manufacturing base, enabling sustainable export-led growth. This externalisation is also helped by the development of small and medium-sized enterprises.
In terms of industry structure, there is an abundance of non-equity FDI such as investment by original equipment manufacturers and global outsourcers and subcontractors.
Asia’s infrastructure development is enjoying a growth phase partly aided by infrastructure financing. This, together with economic and technical co-operation within APEC economies, should facilitate distribution and intra-Asia trade, preparing the region well for the 2015 Asean Economic Community.
Asia is also undergoing gradual regulatory reforms. Countries are continually improving market access and ease of doing business. Sri Lanka’s easier credit, India’s streamlined trading procedures and competitive investment incentives all help to build a more self-sustaining and resilient Asia.
With more European, US and other foreign companies entering Asia or expanding their Asia businesses, the outlook for Asia in 2009 remains healthy, even if softened by a weaker first quarter.
Lawrence Yeo is CEO of AsiaBIZ Strategy, a Singapore-based consultancy that provides Asia market research and investment/trade promotion services.