Asian countries are likely to weather the global economic downturn while the rest of the world will remain in the danger zone, according to a Philippine economist.
Speaking at the recent PortCalls Cargo Economics Conference in Manila Diamond Hotel, Dennis Arroyo explained most developed economies, particularly the United States, Europe and Japan, will continue to perform below par.
A World Bank consultant and Social Weather Stations fellow and director, Arroyo said the world’s growth drivers are in the Asia-Pacific, particularly China and India and other Asian countries, including the Philippines.
“Asia Pacific will be the engine for growth as China and India continue to remain resilient and continue to move up in the supply chain,” Arroyo noted.
“Growth of these countries specifically China will spill over to its neighboring countries as China is only producing high-tech products and sourcing mid-tech products from neighboring countries, including the Philippines,” he added.
In the past decade, China has been very aggressive and increased rapidly from being the fifth largest partner of the US and Europe to second largest partner for both.
India, on the other hand, will quadruple its domestic consumption by 2025.
“Japan is recovering but growth won’t be dynamic but it will affect most countries as Japan continues to import more food due to the lingering effects of the Fukushima nuclear scare,” Arroyo said.
Aside from China, India and the rest of the Asia-Pacific region, another source of growth is Brazil, he added. In the next five years the South American country will host several huge events, including the World Youth Day in 2013, World Cup in 2014, and the Olympics in 2016, which will mean an uptick in activities involving infrastructure.
Trade in the Asia Pacific has recovered strongly since the first quarter of 2010. Asia-Pacific trade grew more than 30% in 2010 compared with the 21% growth for the world, Arroyo pointed out.
Developing Asia is also seen to continue growing at more than 8% per annum throughout the first half of this decade compared to the world economy’s growth of 4%.
Asia Pacific’s share in world merchandise exports rose from 30% to 35% in the last decade while its share in the manufacturing jumped 31% to 37%. The region’s share of fuel and mining improved from 26% to 31% while share in the world agricultural exports remained stable at 21-22%.
The Philippines expects a 5.40% increase in exports this year and 7.24% growth in 2012 while imports are seen growing by 5.54% this year and 9.68% next.
But Arroyo noted that growth of Asia-Pacific exports and imports has declined since the last quarter of 2010, partly due to trade growth normalization. In early 2010, growth was measured relative to the negative growth in 2009.
The developing countries of Asia and the Pacific may see their export growth almost halved from 17.3% in 2010 to just over 9% in 2011, Arroyo said.
