The New Balance of Economic Power

east asiaRapid urbanization is propelling growth across emerging markets and shifting the world’s economic balance toward the east and south. By 2025, it will create a “consumer class” with more than four billion people, up from a billion in 1990. Nearly half will live in the emerging world’s cities, which are set to inject almost $25 trillion into the global economy. Yet business leaders mostly ignore them. To learn about 440 largely obscure urban areas that will account for close to 50 percent of expected global GDP growth between 2010 and 2025.

South-east Asia’s economic growth will return to a “robust” pre-crisis average of 5.5% over the next five years, according to the OECD’s latest forecasts.

The 10 economies of the Association of South-East Asian Nations (Asean) will show “resilience” to the predicted slowdown of China andIndia, the South-East Asian Economic Outlook 2013 report said.

The Paris-based thinktank forecasts China’s economic growth will average 8.3% over the next five years, compared with 10.5% during the pre-crisis period from 2000-07. India’s growth is forecast to slow to 6.4% from 7.1%.

The south-east Asian countries of Brunei, Burma (Myanmar), Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam will be insulated by a continuing shift to domestic demand, rather than exports, as the main driver of economic growth, the report said.

“Domestic demand growth, and particularly private consumption and investment, will be the main drivers of growth in most Asean countries. Growth will be less reliant on net exports than in the past. The expansion of the middle class is likely to continue to boost domestic demand,” said
deputy secretary general Rintaro Tamaki.

The region’s “remarkable” expansion of the middle class has boosted spending on education and health as well as durable goods such as cars and household appliances.

 But the report urged progress on reducing social and economic differences between Asean nations. Huge disparities in GDP per capita exist in the region – with faster rises in the Asean-6 group of Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand than in Cambodia, Laos, Myanmar and Vietnam (CLMV).Vietnam has been the most successful CLMV country in closing the gap with its wealthier neighbours and reducing domestic disparities, although inflation is a concern. Cambodia has been slow in catching up – but has managed to reduce income inequality at home. Laos has caught up quickly but at the cost of widening domestic disparities.

Source: The Guardian

Country 2011 2012 2017 2000-2007 2013-2017
Brunei 2.2 2.6 2.9 2.4
Indonesia 6.5 6 6.6 5.1 6.4
Malaysia 5.1 4.8 5.5 5.5 5.1
Philippines 3.9 5.4 5.3 4.9 5.5
Singapore 4.9 2.4 3.8 6.4 3.1
Thailand 0.1 5.5 5.3 5.1 5.1
Cambodia 7.1 6.7 7.3 9.6 6.9
Laos 8 8.2 7.5 6.8 7.3
Burma 5.5 6.1 6.7 6.3
Vietnam 5.9 5 6.3 7.6 5.6
China 9.2 7.9 10.5 8.1
India 6.8 7 7.1 6.5

Source: OECD medium-term projection framework (MPF)

Posted in News.