Asian Economies Still Strong

Young and wealthy drive consumption

Asia's strong economic growth will persist despite an ailing U.S. economy as the region diversifies its export markets, according to Merrilly Lynch. Inflation is a bigger risk to the region than a slowdown induced by a recession in the U.S., the world's biggest economy, according to Timothy Bond, Merrill Lynch's chief Asia economist.

Despite a global credit crunch resulting from a crisis in the U.S. housing market, Asian economies expanded 9.5% and China grew 11.5% in the second half of last year, explained Timothy Bond, Merrill Lynch's chief Asia economist at a conference in Singapore.

In the first quarter of this year, the region is expected to grow a slower but still robust 9%, and China 10.5%, he said.

Bond noted that while Asian exports to the U.S. were flat last year, shipments of made-in-Asia goods to the rest of the world expanded 19%. Exports to Europe have been growing 25-28% annually due mainly to the stronger euro currency which makes Asian goods cheaper, Bond said, adding that intra-Asian trade has also increased. "Europe has been the number one driver of Asian exports over the past few years, not the U.S.," he added.

Any slowdown in exports should be offset by an acceleration in consumption, powered by the emergence of younger and wealthier Asians who, unlike their parents, would like to spend their money, Merrill Lynch experts said. Jyoti Jaipuria, Merrill Lynch's head of equity research in India, said 50% of India's more than one billion population are below the age of 30 and many of them are becoming richer and are more likely to spend. In India "the consumer is learning to blow up money just like in the U.S.," he said. "In the last five years, you have seen people become wealthier in this region... There's many more millionaires in Asia now than there were five years ago," said Mark Matthews, chief Asia equities strategist at Merrill Lynch.

Copyright Agence France-Presse, 2008

TAGS: Trade
Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish