Asia expected to account for 60% of global GDP growth in 2024: EIU

Despite higher risk attached to geopolitics and China’s economy, it will remain the main region for growth opportunities, EIU noted in its Asia Outlook 2024.

Southeast Asia’s status as a maker of green equipment will rise, as markets seek alternatives to Chinese supply. It will face global competition, however, and its exports could be subject to unwelcome regulatory actions.

Though the United States could keep its strategic focus on Asia following Russia’s invasion of Ukraine, it will find it harder to do so after the emergence of conflict in the Middle East, the report noted.

Within Asia, China is expected to contribute two percentage points of regional growth (or slightly more than half the total) in 2024. The contribution represents a dip from the historical average, but still remains substantive.

By contrast, India is projected to make a 0.6 percentage point or a 15 per cent contribution—the second highest for a single market—with South-east Asia (led by Indonesia) offering slightly less support. The contributions for these markets are not rising significantly against the historical trend, despite widening investor interest in their manufacturing potential and consumer markets, the EIT report noted.

Smaller emerging markets in the region provide the best opportunities to tap into catch-up growth. Bangladesh, Indonesia, Vietnam, Malaysia and, to some extent, the Philippines are projected to grow faster in the medium term, drawing closer to the level of GDP per head in developed Asian economies like Japan, Singapore and South Korea.

India, on the other hand, because of weaker than historical average growth, is projected to diverge away from the catch-up trend.

Members of the Association for South-East Asian Nations (ASEAN) seem poised to play an increasingly pivotal role as manufacturing hubs. Southeast Asia’s cost advantages make it a natural alternative to Chinese green products.

However, the ASEAN region will face competition in terms of low-cost manufacturing from India, which is offering incentives of its own through its Production Linked Incentive Scheme, the report added.

Fibre2Fashion News Desk (DS)