Celebrations were upbeat, with none of the gloom currently found in the mature economies. The changing face of the region continues to provide economic drivers for Asia Pacific to perform well. Urbanisation, population growth, the rise of the affluent consumer, output of commodities and manufactured goods, together with cost competitiveness in the services sector, combine to underpin the region’s growth in the Year of the Dragon.
Celebrations were upbeat, with none of the gloom currently found in the mature economies. The changing face of the region continues to provide economic drivers for Asia Pacific to perform well.
Following the January celebrations, it’s been back to business in February, marching onwards with the transformation taking place in these emerging economies. Between 2007 and 2012, the Chinese economy will expand by almost 60 per cent. Emerging Asia as a whole will grow by almost 50 per cent. The high-income countries are looking at just three per cent.
Forecasts for this year suggest that these currently more resilient economies will continue to be robust. They can’t entirely escape the impact that high credit risk has had on the mature economies, but they are more than bearing up. In December 2011, China was still forecast to grow by 8.3 per cent in 2012 and India by 7.5 per cent.
There are inevitable vulnerabilities. Externally there are threats via the high-income countries’ economic struggle. The eurozone crisis can be expected to contribute to this even if it doesn’t get any worse. Sovereign defaults, banking failures and possible exits from eurozone members would all have an impact. Commodity prices are also vulnerable and disrupted oil prices, if further Middle East unrest occurs, would be problematic.
Internally, challenges include managing the transition from investment-led to consumption-led growth, together with potential property market instability. Rising aspirations and incomes have led to concerns over environmental sustainability.
Inward investors have long used Asia as a manufacturing hub because of the cheaper costs. This is now giving way to Asia's growing domestic demand, fuelled by a rapidly growing middle income group. Market potential includes consumer retail, healthcare and healthcare products, pharmaceuticals and the leisure sector. Infrastructure and education are similarly buoyant. These domestic markets will continue to fuel the region's prosperity, creating opportunity for inward and local investors alike.
Faithful+Gould is especially strong in these areas. We are located in China, India and Singapore, and are also working in Thailand and Indonesia. In support of our clients’ projects, we have accumulated significant benchmarking data on construction costs across the region. We use this to ensure that our clients get best value for money. We are able to assist inward investors with language and cultural barriers, provide introductions to local partner organisations, and offer guidance on bureaucratic complexity and local regulatory and legal systems.