Asia Outlook
Group Economics Emerging Markets Research
28 November 2016
Pretty resilient to ‘Trump risks’ Arjen van Dijkhuizen Senior Economist Tel: +31 20 628 8052 arjen.van.dijkhuizen@nl.abnamro.com
Upward revision of China leaves regional growth forecast at almost 6% in 2017 Regional growth expected to slow further in 2018, driven by China Trump victory (and Fed hike) trigger renewed tightening financial conditions … … while posing risks in the areas of foreign trade and foreign investment This adds to the risks related to a China hard landing, high debts and geopolitics.
Stabilisation in China leaves regional growth close to 6% this year For two years now, regional growth in emerging Asia has been close to 6%, as fiscal and monetary easing supporting domestic demand is offsetting subdued external demand. Our regional manufacturing PMI has even been improving over the past few months, reflecting a pick-up in global manufacturing and trade. Despite a couple of structural drags (high debt, overcapacity, weak private investment etcetera), China’s slowdown remains very gradual in nature, as the authorities have added (mainly fiscal) stimulus. China’s growth has been falling from 7.3% in 2014 to 6.9% in 2015 and to an expected 6.7% this year. Compared to 2015, growth is also expected to fall this year in Malaysia (from 5% to 4%), Singapore (fr om 2% to 1.5%) and Hong Kong (from 2.4% to 1.5%). By contrast, we expect growth to pick up this year in Taiwan (from 0.7% to 1%), as the global tech cycle improves. Meanwhile, growth is more or less at similar levels to last year’s in India (at 7.5%, having surpassed China as fastest growing emerging giant), South Korea (around 2.5%), Indonesia (5%) and Thailand (3%). Compared to our previous Asia outlook published in September, we raised our 2016 estimate for China (from 6.5% to 6.7%) and Hong Kong (from 1% to 1.5%).
Industrial production bottoming out?
Regional growth stable around 6%, PMIs improve further Regional growth, % yoy
Regional Manuf. PMI (China: NBS)
CPB index, production weighted, % yoy
12
65
14
10
60
12
8
55
6
50
4
45
2
40
2
35
0
8 6
10
8
0 08
09
10
11
12
Economic growth (lhs)
13
14
15
4
6 4
2
0 11
16
13
14
Emerging Asia (lhs)
Manufacturing PMI (rhs)
Source: Bloomberg, Thomson Reuters Datastream, ABN AMRO Group Econ.
12
15
16
World (rhs)
Source: CPB
Upward revision of China forecast will leave regional growth almost 6% in 2017 Regarding 2017, compared to our previous Asia outlook published in September we have raised our growth forecast for China from 6% to 6.5% for the following reasons: 1) the very stable growth performance this year, 2) the fact that 2017 is a politically important year
Insights.abnamro.nl/en