Alinova Holding S.A. - East Asia Growth
Channel: Alinova Holding S.A.
Date: 2015-01-04

Developing countries in the Asia Pacific region will be a little slower economic growth this year, but the growth rate of harvest in the region, except for China, as the gradual recovery in high-income economies will increase the demand for exports from the region.
      Developing Asia Pacific remains the fastest growing region in the world.
      Overall, developing countries in Asia Pacific will grow by 6.9% this year and in 2015, down from 7.2% in 2013.
      In China, growth will ease slightly to 7.4% this year and 7.2% in 2015, amid structural reforms to address financial vulnerabilities and structural constraints.
      Excluding China, developing countries will grow by 4.8% this year before rising to 5.3% in 2015, as exports rise and internal adjustment in the large economies of Southeast Asia have been completed.
      How each country benefits from the global recovery will depend on your investment and the environment in exports.
      China, Vietnam, Malaysia and Cambodia are well positioned to increase its exports. Malaysia, for example, will grow by 5.7% compared to 4.9% in April, reflecting strong exports in the first half of the year.
      In Indonesia, which is still based on commodity exports, growth will drop to 5.2% this year from 5.8% in 2013. This is due to falling commodity prices, public consumption lower than expected and slower credit growth.
      The economies of the region are supported by strong private consumption,: as spending related to the elections in Indonesia, a strong labor market in Malaysia and remittances in the Philippines.
      Uncertainties remain significant.
      If the global recovery falters, global financial conditions are contracted sharply, or international and regional geopolitical tensions rise, the economic outlook for the region will become challenging blackberries.
      The anche region remains vulnerable to a sharp slowdown in China, which, although unlikely to happen, could reach commodity producers, exporters in Mongolia: as exporters of metals and coal in Indonesia, especially hard.
      The best way for countries of the region to address these risks is to address vulnerabilities and inefficiencies caused by a prolonged loose monetary policy and fiscal stimulus period and complement these measures with structural reforms to improve competitiveness of exports.
      Mongolia and Lao PDR, for example, the fiscal deficit should be reduced and tight monetary policy.
      In Indonesia, Malaysia, Philippines and Thailand, measures to enhance revenue and reduce poorly targeted subsidies help create space for investments that improve productivity and spending to reduce poverty, while gradual rebuilding fiscal buffers.
      In China, as the government tries to find a balance between containing increasing risks and compliance with the objectives of growth, we believe that structural reforms in the sectors previously been reserved for companies and services could help offset the impact of containment measures the local government debt and curb shadow banking.
      Eventually, we encourage countries to implement the structural reforms needed to boost export competitiveness and maximize the benefits of the global recovery.
      Key reforms include investment in infrastructure, logistics and services liberalization and foreign direct investment.