Malaysia Airline’s missing flight in March this year, followed by South Korea’s ferry disaster in April and Hong Kong’s mass protests in September, which demanded more democracy from China, made for an eventful year for the Asia-Pacific. And as the region’s larger and wealthier economies slow down, what is its economic outlook for 2015? According to estimates, it will be much the same as 2014; while the bigger economies will slow further, they will continue to grow at a relatively steady pace, while poorer and smaller economies will grow faster. This means that on the whole, the region's economy could grow by up to 6.9% in 2015, according to World Bank forecasts.
Although China will grow at a relatively slow 7%, it will retain its position as Asia’s top economic performer. Although it is unlikely that the US will ratify the Trans-Pacific Partnership free-trade agreement by December 2015, undeterred China will continue to exert its economic power in Asia as a manufacturing base, as well as an importer and investor in overseas assets. Moreover, Shanghai will rise as a significant financial centre, attracting more ancillary businesses and releasing more growth-enabling credit and capital to businesses in the city.
Hong Kong and Taiwan’s sound macroeconomic fundamentals will allow them to grow by 4% next year, although some observers predict that Hong Kong’s growth may contract to 3.1% as a result of the disruptions caused by the protests. Japan’s 2015 growth, supported mainly by external demand, is forecast at a sluggish 0.8%, slowing down after a consumption tax increase was imposed in early 2014. While South Korea’s economy will grow by a moderate 4% in 2015 owing to weak domestic demand, the Malaysian government has set a target of 6% growth as it accelerates its public investment on infrastructure projects.
With the value of India’s economic output expected to increase, the country’s urbanising economy could grow by 6.4% in 2015. Mumbai will be central as the economic powerhouse, contributing to 25% of India’s industrial output and 70% of its maritime trade. Domestic demand, labour markets and strong export growth in the Philippines and Indonesia mean both countries could grow by 6%, and increased commodity prices and growing business confidence could boost New Zealand’s growth to 3.9%.
Smaller emerging Asian countries could witness the fastest growth. Papua New Guinea’s new energy exports and Sri Lanka’s booming construction and export sectors mean both countries could grow by 15% and 7%, respectively. Additionally the rise of Cambodia, Myanmar and Vietnam as outsourcing hubs for low-cost, export-oriented manufacturing means they could grow by 6% each.
Lawrence Yeo is CEO and principal consultant of AsiaBIZ Strategy, a Singapore-based management consulting firm providing Asia market research, business strategy development and export/FDI promotion services. The US subsidiary is East West Enterprise LLC.