Would Asia Be Facing a New Golden Economic Years?Author: Jane Fazackarley
While the Asian economy has experienced some uncertainty in the recent past, expert analysis suggests that many factors will come together to create sustained East Asia economic growth in the future.
A golden economic outlook for the region will open up new opportunities by making it easier for businesses to trade, and it has been predicted that improved financial security will lead to less conflicts in the region, which will further stabilize the Asian economy.
Leadership direction and the economy
Leadership direction will be a crucial part of Asia’s future economic success. Through the Asia-Pacific Economic Corporation (APEC), leaders and ministers continue to come together to encourage free trade, and members are working in unison to lower the costs of exports and imports – a key part to increasing trade between the region’s economies.
Leadership direction is also helping to secure a more stable future for Asia. As an example, India is now the world’s fastest growing economy; Prime Minister Narendra Modi’s pledge to reform taxes in the country will further encourage growth by attracting outside investment, and China has announced additional polices aimed at stabilizing its financial markets.
Another aspect of paving the way for a stronger economy is the recently agreed Trans-Pacific Partnership Agreement; this is set to bolster the economies in some of the major Asian countries such as Singapore, Malaysia and Vietnam. The trade deal will axe taxes on many imports, making trade much easier between countries, and fostering greater economic ties, which should ultimately assist in job creation.
Middle class market and positive effect on the economy
The rise of the middle classes in Asia is also set to have a positive impact on its economy. A Reuter’s report indicates that by 2030, 64 per cent – or 3 billion – citizens in Asia will be considered middle class. With these increased incomes, comes enhanced buying power, which can only be good for the Asian economy as a whole – and for entrepreneurs who can identify a market and who want to do business there.
Forecasts and growth for the coming year
East Asia growth has been strong in the past year, and analysis for 2016 so far seems to indicate the Asian region overall is on a reasonably stable financial footing. One of the major players, China – whose markets and slowing economy caused concern across the globe – is predicted to experience a steadier growth throughout 2016, while forecasts for other Asian regions paint a mixed picture.
Economic challenges faced by Asia
The Asian region has plenty in its favor, but it will also face some economic challenges. The limited global growth could impact on the Asian economy by creating a weaker demand; this effect could be felt more keenly by countries that are dependent on commodities exports – and the demand for exports is already limited.
In the meanwhile, corporate and household debts in the region are spiraling and causing concern; earlier in 2016, the governor of the People’s Bank of China, Zhou Xiaochuan, issued a warning over these debts. In addition, there is a worry that the Hong Kong housing market could be vulnerable, should interest rates surge and cause housing prices to tumble.
While there are many uncertainties facing east Asia economic growth and the Asian economy as a whole, there are also many reasons to be optimistic about its financial future. With new trade agreements, a burgeoning middle class with a greater disposal income, and a number of other factors all coming together at the same time, it seems likely the Asian region will be seeing an economic boom in the years to come, however, it will also face a number of challenges along the way.