ASIANDRAGON

Asiandragon consists a team of experienced investment and wealth managers who are adept at working out a plan for wealth preservation and growth. We focus on growth and opportunities in Asia and a suite of dynamic plans with a strong team of analysts.

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The team focuses on Asia's growth.

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Strong consumer spending has supported growth in Asia’s three largest economies this year, but there are already signs that the region’s recovery may be running out of steam.

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Growth in Asia and the Pacific has accelerated from 3.9 percent in 2022 to 4.6 percent in 2023, unchanged from the projection from last April. This is largely explained by the post-reopening recovery in China and stronger-than-expected growth in the first half of the year in Japan and India. With pandemic restrictions lifted, demand in these economies was bolstered by consumers running down savings accumulated during the pandemic, leading to notable strength in the services sector.

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While Asia is still set to contribute about two-thirds of all global growth this year, it is important to note that growth is significantly lower than what was projected before the pandemic and output has been set back by a series of global shocks.

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We have lowered our estimate for growth in 2024 to 4.2 percent, from the 4.4 percent projected in April. Our less-optimistic assessment is based on signs of slowing growth and investment in the third quarter, in part reflecting weaker external demand as the global economy slows, such as in Southeast Asia and Japan, and faltering real estate investment in China.

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The economic boost that China enjoyed after its re-opening is now losing momentum earlier than previously expected. While we project the rebound will underpin growth quickening to 5 percent this year, the economy would slow to 4.2 percent next year amid the deepening property-sector slump, down from the 4.5 percent we had forecast in 2023.

 

The drag from China would historically have been offset by forecasts for faster growth in the United States and Japan, but the resulting boost is likely to be more muted this time. The strength of the US economy has been focused in the service sector, rather than in goods, which doesn’t fuel greater demand for Asia. And US policies such as the Inflation Reduction Act and CHIPS and Science Act are re-orienting demand toward domestic sources rather than foreign, providing a smaller boost to imports from Asia.

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In the near term, the sharp adjustment in China’s heavily indebted property sector and the resulting slowdown in economic activity will likely spill over to the region, particularly to commodity exporters with close trade links to China. Beyond this, an aging population and slowing productivity growth will further temper growth over the medium-term in China, amid rising risks of geo-economic fragmentation, and bear upon prospects in the rest of Asia and beyond. In a downside scenario where “de-risking” and “re-shoring” strategies take hold, output could decline by up to 10 percent over five years in the Asian economies most closely linked to China’s economy.

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A welcome development is that disinflation is on track in Asia, with inflation now expected to return to central bank target ranges next year in most countries. This process is well ahead of most other regions, where inflation remains high and is expected fall within target only in 2025.