Key Growth Markets in Asia in 2015
2014 has been a difficult year for the Asian economy as a whole, with growth slowing in China, Japan and many of the region’s other leading economies. Of course, with the exception of Japan, this slowdown has been a gradual process, as rising domestic demand levels in Asia and increasing export demand levels in North America have prevented regional economic growth from falling at a faster pace. Looking ahead, there will be some divergence among Asia’s leading economies, with China’s gradual slowdown continuing, while other leading emerging markets in the region will see their slowdowns end in 2015. Likewise, Japan’s struggles will continue in 2015, while the region’s other leading developed economies will record healthy rates of growth next year.
Asia’s two giant emerging markets, China and India, have experienced slowdowns that have had a major impact on the entire region’s economy. In China, GDP growth is forecast to fall from 7.4% this year to 7.2% next year as that country’s economy continues to transform from one that is driven by exports to one that is driven by domestic demand. This shift will have a dramatic impact on exports to China as Chinese demand for natural resources will not rise as it did over the past two decades, while its demand for consumer goods and services will continue to rise at a rapid pace. As for India, it’s long-running slump that saw GDP growth rates remain below 5% for most of the past three years is finally coming to an end this year and the Indian economy is now forecast to grow by 6.7% in 2015. Nevertheless, the soaring rates of growth that were seen in India between 2005 and 2010 will not return in the coming years.
Most of Asia’s other leading emerging markets have also experienced noticeable slowdowns in 2014. For example, two of the region’s best performing large emerging markets, Indonesia and the Philippines, both realized lower rates of economic growth this year as domestic and export demand failed to meet expectations. Nevertheless, domestic demand in both countries is forecast to improve over the course of 2015 and will result in GDP growth rates of 6.7% and 6.6% respectively next year. Likewise, Vietnam’s economy, which has underperformed in recent years, is expected to improve, with GDP growth reaching 6.0% for the first time since 2011. Finally, Thailand will barely register any economic growth this year as a result of the political unrest that took place in that country in the early part of the year, but a more stable political situation in that country will allow economic growth to reach 5.3% in 2015.
Among Asia’s developed economies, there are also a number of opportunities for growth in 2015. While Japan’s economic recovery has come to a crashing halt in recent months, the region’s other developed economies are forecast to record healthy rates of growth next year. For example, South Korea will remain one of the world’s best performing developed economies, as export growth results in an increase in GDP growth from a robust 3.8% in 2014 to 4.3% in 2015. Likewise, Taiwan, Hong Kong and Singapore will all record decent, if unspectacular, rates of economic growth in 2015. Altogether, Asia will remain a key driver of global economic growth in 2015, even as its two largest economies experience lower rates of growth in the coming year.