Asia Trade: Market Outlook
In the last ten years, growth in the Asian continent has been astounding. From 2008 until now, China has more than doubled its GDP, from 4.5 trillion to a staggering 11.2 trillion at the end of 2016. India too, doubled its GDP from 1.1 trillion to 2.26 trillion. Shanghai, Singapore and Hong Kong all ranked in the top ten for the most expensive cities for housing. It is without a shadow of a doubt, that the largest and most populous continent in the world is beginning to rise and advance into the modern world.
2018 however, was a tumultuous year. There have been many spectacles which have shaken economists to their very core. One major economic shock that comes to mind is the US-China trade dispute that has quickly escalated from mere threats to an all-out trade war. As of Thursday the 23rd of August, the USA imposed a second wave of tariffs on Chinese goods worth $16bn and China immediately responded in kind. The current US administration has threatened a third round of tariffs with president Trump also saying he could slap tariffs on all Chinese imports. This could not have come at a worse time for China, who according to J.P Morgan analysts had just begun fixing its economic problems. Many other analysts suggested that the impact on China would be far less volatile, due to US goods not holding a commanding presence in China. This, however, does not take into consideration intangibles such as business sentiment and foreign investment. Indirect effects could have severe consequences which can cause issues not just for China, but for the entire continent.
Looking past this glaring headline however is the undeniable fact that China’s economy is still in a very good position. Private investment is growing, and China’s government is likely to implement expansionary fiscal policies to further boost confidence and activity. In addition to this, the devaluing of the yuan will make China’s goods very competitive in the US market. Looking at this situation, it is expected that trade will eventually pick back up and increase in China overall, particularly the technological industry. With over 700 million people using smartphones, it is an incredibly attractive market for app developers and mobile phone creators.
Developing Asian economies have also managed to do well despite the rising interest rates of the United States. Japan, the third largest economy in the world, seems to be doing relatively decent. The news headlines have been dominated by the Prime Minister’s, Shinzo Abe, cronyism scandal. However, there has been reports of strong earnings growth and wage growth. This coupled with the fact that Japan has such a robust labour market makes the outlook a positive one.
To conclude, it is believed that the Asian trade market outlook is one that may have some issues along the road. However, with a lot of less developed economies taking the initiative to try and lift their population out of poverty, it is apparent that growth is on the horizon. Moreover, the age distribution of many Asian countries is beginning to shift. More educated young adults are entering the labour market, offering valuable skills and boosting the GDP of their respective countries. Asia is a continent to invest in; that much is certain.
Previous Post Next Post
