Is Asia still the best source of Economic Growth?
All signs point to a prosperous future in Asian Markets, despite questions being raised over the regions legitimacy as a powerhouse.
For as long as most investors will remember, Asia has been the standout region for economic and investment growth. With favourable demographics, a burgeoning middle class, and rapidly expanding corporate and tech sectors, many believe its upward trend will continue for the foreseeable future.
There are many factors at play. A decade ago, Asia was responsible for roughly a quarter of global trade in goods. Presently, it is responsible for approximately a third. By 2040, McKinsey research indicates that Asia will be responsible for over half of the world's GDP, and nearly 40% of global consumption. These developments have also inspired growth in Asia's cities, with Asia now home to 21 of the world's 30 largest cities. It has been argued that we are about to enter, or have already entered, 'the Asian Century'.
"Asia's economy experienced a meteoric rise in the past 30 years and its potential for economic growth looks set to continue on both an absolute and relative basis." said Gregoire Sharma, fixed income fund analyst at Signia. He points to several factors behind this, including a robust corporate sector, demographics, and increased trade collaboration between Asian nations. Focusing on the former, Sharma noted that Asian firms now represent over 40% of the world's largest 5,000 companies, almost double the total based in Europe.
'Some sectors have been performing exceptionally well, such as financial services in China and Australia, and technology-driven sectors in China, Japan, South Korea, and increasingly India,' he said.
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