Asia’s Economic Forecast

May 28th, 2014 by admin Leave a reply »

asia-pacific-regionLast week Asia witnessed a dollar rise against the yen. This is probably connected to potential investors waiting on what lies ahead for the American and Japanese monetary policy. In addition, the Thai baht plummeted after martial law was declared by the army. The dollar has been mixed vis-à-vis other currencies in the Asia-Pacific region.

During the same time period, there was an escalation in the US dollar to 58.59 Indian Rupees, following political advancements in the general election by the India unit. As well, it strengthened to 11,446.30 Indonesian rupiah and 43.69 Philippine pesos.

How is Asia’s economic outlook being impacted today? According to the IMF, one way is China’s sharp slowdown (which was most likely caused by vulnerabilities in the fiscal sector). Yet it is anticipated that Asian growth and development will remain steady at 5.4 percent in 2014 (a slight jump from the previous forecast of 5.3 percent). Thereafter this will increase to 5.5 percent in 2015. America and Europe’s fiscal recovery is likely to be good news for Asian regional markets too.

But at the same time, warned Michael Spencer, Asia Chief Economist at Deutsche Bank, some of S.E Asia’s regional currencies could be subject to “downward pressure,” given that American bond yields increase vis-à-vis the recovering economy.

Those who are concerned about cheaper energy prices bringing back manufacturing to America and the impact that will have on the Asian economy, need not fret. Asia has a well-established supply chain and this thus should not affect its principal tech manufacturing market. Plastics and petrochemicals industry might encounter pressure however.


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