The year has started well for most Asian countries. However, the month of February showed that the trees will not grow into the sky. Investors around the globe became nervous and questioned more and more the continuation of the long-lasting bull market. [mepr-active membership=”1734″ ifallowed=”show” unauth=”message” unauth_message=”Please login or purchase a membership to view full text.”]This fear led to higher volatility in most financial markets.
What can be expected this year regarding economic growth in Asia Pacific? Despite the tendency to more protectionism, geopolitical risks, a weak USD, and concerns about rising debt levels, the general economic outlook remains still stable for most Asian countries in 2018. In the table above, we have summarized the latest forecasts for GDP growth rates from Worldbank and other sources.
India is still leading the ranking with the highest GDP growth among Asia Pacific countries with a predicted growth rate of 7.3 percent this year, followed by the Philippines with a growth rate of 6.8 percent. On the lower end are Japan and Taiwan with expected GDP growth rates of 1.2 and 2.4 percent respectively for 2018.
A look at growth rate trends shows that Philippines, Vietnam, Indonesia, Thailand, Singapore and South Korea are expected to pursue a steady growth path with almost the same rates as in the previous year. Only Australia and India will gain momentum. The two countries are expected to have an accelerated growth of more than 0.4 percent points this year to 2.7 and 7.3 percent respectively. Weaker growth rates are predicted for China, Malaysia, Hong Kong, New Zealand, Taiwan, and Japan this year. The six countries will lose growth momentum by more than 0.3 percent points according to the forecasts.
Economic developments will not have an immediate effect on the capital markets. However, investors should act cautiously especially in those markets that have shown an already very strong performance last year. We expect a bumpy ride with only moderate returns at the end of the year for most Asian markets. But let’s see how these GDP forecasts will prove to be correct.
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