The Asia Pacific economic outlook is expected to remain bright in 2024 after a rapid expansion in 2023, said Rajiv Biswas, Asia Pacific Chief Economist at S&P Global Market Intelligence recently.
The region is expected to be the fastest growing region of the world economy in 2024, underpinned by resilient domestic demand in East Asia and India, the economist noted.
Some improvement in East Asian exports will also support economic expansion, helped by a recovery in electronics exports and continued strong growth in exports of new electric vehicles (EVs) from key Asian auto manufacturing hubs, he added.
Asia Pacific economic outlook: Medium-term
According to Biswas, the region’s medium-term outlook is as follows.
- There’d be continued resilient expansion in the APAC region, with robust domestic demand in many Asian emerging economies, including China, India, Indonesia, Philippines and Vietnam supporting economic growth momentum.
- The positive medium-term outlook is supported by a number of factors.
- Continued strong expansion in domestic consumer markets in large APAC economies, notably China, India and Indonesia, will be an important factor supporting further growth in intra-APAC trade in raw materials, intermediate goods and final manufactured products.
- Sustained firm economic growth is driving rapid growth in per capita GDP in many of Asia's largest emerging markets, helping to boost demand for a wide range of goods and services in Asian consumer markets.
- An important medium-term strength for many APAC industrial economies is their global competitiveness in the electronics manufacturing supply chain.
- Electronics production is an important part of the manufacturing export sector for many Asian economies, including South Korea, mainland China, Japan, Malaysia, Singapore, Philippines, Taiwan, Thailand and Vietnam.
- India also rapidly building up its electronics manufacturing sector. Furthermore, the electronics supply chain is highly integrated across different economies in East Asia.
- The medium-term outlook for Asian electronics manufacturing is supported by many key growth drivers.
- This includes continued 5G rollout over the next five years, which will continue to support demand for 5G mobile phones, as well as demand growth for electronics products that integrate artificial intelligence capabilities.
- Demand for industrial electronics is also expected to grow rapidly over the medium term, helped by Industry 4.0, as industrial automation and the Internet of Things boosts rapidly growth in demand for industrial electronics.
- APAC auto manufacturing hubs are also benefiting from the global transition to electric vehicles (EV), which is driving demand for EV exports produced in mainland China, Japan and South Korea.
- In early 2023, Hyundai started assembly of Ioniq 5 EVs at its new Hyundai Motor Group Innovation Center in Singapore. Indonesia has also benefited from strong foreign direct investment flows from multinationals to build new nickel smelters and electric vehicle battery plants.
- With international tourism travel recovering strongly following the pandemic, the tourism industry is expected to be another important growth driver for APAC exports over the medium-term.
- International tourism flows to the APAC region are expected to show strong growth, helped by rapidly rising household incomes in large Asian economies, notably China, India and Indonesia.
- The rapid growth of APAC exports is also expected to be strengthened by the APAC regional trade liberalisation architecture.
- This includes the large Regional Comprehensive Economic Partnership (RCEP) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) multilateral trade agreements as well as the growing network of major bilateral FTAs involving APAC economies.
Overall, the medium-term economic outlook for the APAC region remains positive, Biswas said.
He’s also positive about the longer term Asia Pacific economic outlook. “APAC is already the largest region of the global economy measured in terms of size of nominal GDP, with emerging Asia expected to continue to grow rapidly over the decade ahead,” he forecast.
