China’s slowdown to moderate growth in Emerging Asia

 Jayarama Emani | The Dollar Business “Growth in Emerging Asia – South East Asia, China and India – is expected, in general, to remain strong over the medium term as these economies continue to shift from a reliance on exports to a broader base of new growth drivers. The Gross Domestic Product (GDP) growth in the region is forecast to average 6.5% per year over 2015-19”, said the Organisation for Economic Cooperation and Development (OECD) in its report on “Economic Outlook for South East Asia, China and India 2015.” However, the growth in Emerging Asia will moderate gradually due to the slowdown in China. For the 10 ASEAN countries as a whole, growth momentum remains robust and broadly similar to that of the past 10 years, averaging 5.6% over 2015-19. While monetary policy normalisation in the United States is a worry, other risks like increased competition in export manufacturing among emerging economies, poses a serious threat to the export-led growth model. The implementation of “Abenomics” reforms will also be felt in the region’s economies with close trade and investment links to Japan, the report added. China and India face significant challenges, said the report. China’s growth is slowing (6.8% over 2015-19, compared with 8.2% over 2011-13) as it seeks to adjust to an ageing population, switches its growth focus from investment to consumption, and copes with agricultural, environmental and educational issues. India’s growth should be stable over 2015-19 (6.7% compared with 5.5% over 2011-13), but this could change as the new government carries out ambitious plan for investment and reform, the report added. As a result, further acceleration of regional integration towards the goal of the ASEAN Economic Community by 2015 is essential, the report says and adds, growth depends on the success of key regional initiatives, such as reducing the Common Effective Preferential Tariffs and improving trade facilitation, accelerating the development of institutional arrangements like investment frameworks, deeper financial integration, education, infrastructure and greater progress on narrowing regional disparities. Integration should also address a broader range of issues in future, including topics like the environment and green growth, the report concluded.  

 This article was published on March 25, 2015.