Home » Breaking News, Customs & Trade » Developing Asia predicted to grow 4.6% in 2014
  • Facebook
  • Twitter
  • Google Plus
  • LinkedIn
  • PDF
  • Email
  • Print
  • Add to favorites

Emerging markets including developing Asia will continue to outpace advanced economies in growth, but they should brace for a slower and bumpier ride in 2014, forecasts The Conference Board, an independent global business membership and research association.

“The ongoing shift of economic activity from mature to emerging markets will continue, but not at the rapidity seen over the last decade,” says its latest Global Economic Outlook, which projects output growth for 2014, 2014–2019, and 2020-2025 for 11 major regions and over 50 mature and emerging economies.

The paper projects overall growth in developing and emerging economies to drop to 4.6 percent in 2014, compared to 4.7 percent in 2013 and 6.4 percent in 2010-2012. Most of this slowdown is driven by China’s economy, for which further slowdown is anticipated in 2014 to 7 percent.

Other large emerging markets are seen to “somewhat recover” from weaker growth in 2013, rebounding in 2014 to 4.4 percent in India and 4.6 percent in other developing Asia. Elsewhere, growth projections are 2.7 percent in Latin America, 2 percent in the Middle East and North Africa, 4.2 percent in Sub-Saharan, and 2.5 percent in Russia, Central Asia, and Southeast Europe.

In 2014-2019 and 2020-2025, growth in China is projected to fall to an average of 5.9 percent and 3.5 percent, respectively. The corresponding numbers in India are 4.8 percent and 3.6 percent, and in Brazil, 2.9 percent and 2.8 percent.

By the middle of the next decade, emerging markets will still substantially outpace advanced economies—growing at an average 3.2 percent versus 1.4 percent—but by a much smaller margin compared to the recent boom years, noted the paper.

“The slowing trend in the world’s major emerging economies results from them entering a period requiring structural reforms in their growth models as they transition away from low-cost, export-driven production to consumer-driven societies with larger roles for domestic service industries,” explained Bart van Ark, chief economist of The Conference Board.

“To avoid entering a ‘middle-income trap’—that is, becoming too rich to compete on costs and too poor to compete on innovation—these countries need to recalibrate their policies in areas ranging from education and infrastructure investments to regulatory and tax regimes that support middle-class consumption,” he added. “Such reforms take time and tact, and whether they succeed will be crucial to the long-term vitality of the global economy in the decades ahead.”

World economic growth, which stands at a disappointing 2.8 percent for 2013, will only slightly increase to 3.1 percent in 2014, The Conference Board predicts in a statement released November 12. It adds that the annual global growth average of 3.1 percent will remain from 2014 to 2019, but could decline to an average of 2.4 percent in the period 2020-2025 on the basis of the current trend.

“Growth in 2013 has fallen below even our cautious projections,” said van Ark. “Among mature economies, Europe’s worse-than-expected recession was compounded by self-inflicted damage in the U.S., culminating in the government shutdown. Meanwhile, growth in such emerging markets as India, Mexico, and Brazil saw even larger slowdowns than we anticipated.”

But the good news for 2014 and beyond, he said, is that the “upside growth opportunities present themselves  somewhat more clearly and may offset downsides, provided business and governments invest more heavily in the future of their economies and reform agendas are accelerated to reap the benefits from such investments.”

Across the advanced economies, the outlook predicts 1.7 percent growth in 2014, compared to 1 percent in 2013. Growth in the Euro Area should improve to 0.8 percent from a negative 0.3 percent in 2013; Europe as a whole is projected to grow 1.1 percent. The Euro Area growth should average 1.2 percent across 2014–2025.

U.S. growth is expected to rise from 1.6 percent in 2013 to 2.3 percent in 2014. As in Europe, government policy may be key to realizing these gains. “The U.S. has great potential for private sector-driven growth, but political brinkmanship repeatedly impedes progress,” said van Ark.

In the medium-term, the outlook expects the U.S. to average 2.4 percent in annual growth during 2014-2019, and its long-term trend to slow down to only 1.7 percent in 2020-2025. In the same two periods, Japan is expected to grow at 1 percent and 0.6 percent, respectively.

While the medium-term estimates clearly point to a slowing trend in the global economy, the upside potential may outweigh the downside risks, noted the outlook. “The most powerful upsides would result from continued growth of middle-class consumers in emerging markets and, globally, a better use of technology and innovation that drives up productivity.”

These opportunities will only materialize, it added, if business and governments invest more heavily in the future of their economies, and policy frameworks are reshaped to help capital and jobs flow to those parts of the economy capable of faster productivity growth.

“There have been times before of slow growth, for example during the 1930s and again during the 1980s, that eventually created the breeding ground for great things to come,” van Ark said. “The winners and the losers from a rebound in growth are sorting themselves out right now.”

 

Photo: permanently scatterbrained

No comments yet... Be the first to leave a reply!

Leave a Reply

Your email address will not be published. Required fields are marked *

 
Close
Please support the site
By clicking any of these buttons you help our site to get better
Social PopUP by SumoMe