Growth in Asia is showing signs of improving as risks from advanced economies have receded; developing economies in Asia rely on developed economies for purchasing manufactured goods. Asia has a very robust labour market and great financial conditions for expansion. Unemployment is at multi-year lows in many Asian economies.¹ Asia’s economic power as a whole is expected to grow at nearly 5.75 percent through the course of 2013.² Although Asia’s banking and corporate sectors have buffers, businesses should be ready to respond to shifting markets with speed in order to secure investments.
Nonetheless, there is a growing need to make tax and spending policies more efficient to sustain high growth and expand the middle-class. The middle-class of China in particular is larger than the entire population of America, representing a huge market for international goods and products. Financial imbalances and rising asset prices are building in several Asian economies. Trade disruptions from natural disasters (such as the 2011 Japanese Tsunami) and geopolitical tensions also threaten Asian economies. Finally, there is also the risk of over inflation that is driving labour and material costs up in Asian markets.¹
1. IMF Survey Online. (April 29, 2013). Asia Faces Shifting Risks, New Foundations for Growth. Retrieved from http://www.imf.org/external/pubs/ft/survey/so/2013/CAR042913A.htm
2. International Monetary Fund. (April 2013). Reginal Economic Outlook: Asia and Pacific. Retrieved from http://www.imf.org/external/pubs/ft/reo/2013/apd/eng/areo0413.htm