Asia Pacific is expected to continue to be the fastest-growing region of the world economy in 2017.
Speaking at the CIPS Australasia Conference, IHS senior director and Asia Pacific chief economist Rajiv Biswas said that APAC GDP growth is forecast to be 4.6% in 2017, similar to the 4.7% growth rate estimated for 2016.
This is well ahead well ahead of other market regions, including the Middle East and Sub-Saharan Africa and Latin America, as well as the U.S. and EU.
A number of initiatives are expected to boost the region’s economy over the medium-term, including China’s ‘One Belt One Road’ initiative and the creation of the Asian Infrastructure Investment Bank (AIIB) and Silk Road Fund.
The AIIB was launched in December. It has 57 members, including France, Germany, the UAE, Russia, India and Turkey, and is expected to have $100 billion in capital.
“The pace of economic growth in China is forecast to moderate from 6.7% in 2016 to 6.4% in 2017, as the manufacturing sector continues to undergo considerable restructuring and reform, while residential construction could experience another slowdown,” Biswas said.
He added: “Japan is forecast to grow at a lacklustre pace of around 1% in 2017, similar to 2016, as factors such as demographic ageing and the high level of government debt continue to be a drag on [the country’s] potential growth rate.”
Growth momentum in the Southeast Asian region is expected to remain strong, with ASEAN’s largest economy, Indonesia, forecast to grow at a pace of around 5.1% in 2017, after an estimated 5.0% growth rate in 2016.
As many Asian countries are big exporters of electronics, any upturn in the global economy leads to stronger internal demand.
Vietnam is fast becoming a major manufacturing hub, Biswas said. A big boost for Vietnam will be the EU trade agreement, due to be ratified in the coming months.
Looking at Australia, the weaker dollar is helping to create diversification and manufacturing is showing some improvement. Although there is still a slowdown in mining and engineering, tourism is on the up in Australia and its forecast to grow at a pace of around 2.5% in 2017.