Posted on 06 May 2009
Asia likely to have strongest growth rate
Asia has the “strongest baseline position” for world economic growth and emerging markets in the region, driven by India and China, will produce the strongest growth rate, said global asset manager ING Investment Management (ING IM).
A baseline is a projection of how an economy will develop if existing trends are maintained.
Asian countries also stand out from other regions (for example, the United States and Europe) on account of their relatively healthy financial sectors, ING IM said in a statement.
The largely state-controlled banking sector in China, for example, has reported no or few problems to date while the expansionary policies of the Chinese central bank had prompted a renewed rise in credit growth, it noted.
“China is keeping to its tradition of boosting domestic growth when exports fall, mainly by promoting infrastructure projects,” said Rob Drijkoningen, head of global emerging markets, ING IM Europe.
“Of all the emerging economies, China has the best opportunities to adopt a flexible monetary policy and stimulating fiscal policies. China can consequently act as the engine of the region.”
ING IM noted that “China is a relatively large domestic market and is generally better equipped to withstand a decline in world trade.”
“Its public finances are in order and its current account balance is in surplus,” it added.
Asian countries are now less dependent on foreign capital, and “the increasing strength of emerging Asia has made the relationship between the mature economies and emerging markets much tighter,” ING IM said.
Emerging Asia has, on balance, pursued a financially responsible policy in recent decades.
Its relatively stable position is reflected in a higher price to earnings ratio of 15 on earnings expected in the next 12 months, according to ING IM.
The figures for emerging Latin America (11), emerging Europe (5) and the entire universe of emerging economies (9.3), “are appreciably lower,” it noted.
