Asia-Pacific Economy 2019: Stable Growth in Domestic Demand, Beware of "Grey Swan"

In the past 2018, international political turmoil and protectionism have fluctuated. In 2019, the uncertainties in the world economy have indeed increased. However, in the Asia-Pacific economic zone where emerging economies dominate, people are still cautiously optimistic about this year's growth prospects. I believe that emerging economies can tap the potential of domestic demand, maintain the growth trend, and input confidence and motivation for global development.

At this stage, protectionism is on the rise and trade disputes are intensifying. The economic community has fully estimated the risk factors for this year. Nomura Securities Co., Ltd., a large Japanese securities company, has accurately predicted that the emerging market currencies will fall in 2018 and the market will fluctuate sharply in February. Recently, the company's analysis team released a report to estimate the negative "Grey Swan" incident in 2019, pointing out that there is a risk of a major earthquake in the global market, and emerging markets do not rule out deflation. The research team of the HSBC Group pointed out that this year's oil price may be rushing, and the price per barrel is as low as $20. In this context, many countries and regions in the Asia-Pacific region, especially some heavyweight economies, have lowered their growth expectations this year, including Japan, South Korea, Singapore, Australia, India and China's Hong Kong and Taiwan regions.

Of course, lowering growth expectations does not mean losing confidence in the prospects. Analysts are generally optimistic about the economic situation in the Asia-Pacific region in 2019.

The Asian Development Bank’s updated report on the updated 2018 Asian Development Outlook released in December 2018 clearly stated that thanks to strong domestic demand, especially in the “locomotive” of China and India, the Asia-Pacific economy in 2018 and 2019 Ability to cope with challenges such as increased global trade frictions and maintain stable economic growth. According to the report, Asia-Pacific developing economies are expected to grow by 6.0% in 2018 and 5.8% in 2019. Both estimates have not changed compared to the bank’s report released in September.

While Nomura Securities and HSBC Group warned of the negative “grey swan”, they also pointed out that international trade frictions in 2019 may bring good news, boosting consumer and investor confidence and having a positive impact on growth. Many Hong Kong local researchers have noticed that the Central Economic Work Conference has highlighted steady growth and echoed the previously proposed "six stables", further demonstrating China's determination and confidence in maintaining economic growth.

For a period of time, China’s economy has long been a regulator of the Asia-Pacific economy. China has replaced the United States as the largest exporter of emerging markets. At the same time, China is gradually turning to the consumer-oriented economy and has become the world's second largest consumer market. In the context of increased household income, Chinese consumers' demand for goods and services continues to grow, creating opportunities for related industries, and the radiation effect extends to other developing economies in Asia Pacific.

In addition to China, other important economies in the Asia-Pacific region are also good news, instilling confidence in 2019. The International Monetary Fund predicted in December 2018 that Japan’s economy grew by 1.1% in 2018 and was lowered to 0.9% in 2019. However, under the weak growth data, there is an important piece of information hidden: Japan continued to maintain positive growth from December 2012 to January 2019, setting a record for the country's longest continuous growth after World War II. Japan will host the Summer Olympics in 2020, and a number of subsequent infrastructure projects will greatly stimulate domestic demand and help the country maintain positive growth, thus providing positive energy for the entire Asia-Pacific economy.

At the same time, thanks to China's shift in development from manufacturing to consumption and services, economies such as Vietnam and Malaysia have benefited. The existing transportation infrastructure in these two countries is relatively developed, which helps to improve logistics and shipping levels and supports regional and international trade. At the same time, some of the regional economies represented by these two countries have lower production costs and labor costs and will occupy a larger share in the manufacturing market.

More importantly, these young people in emerging economies have a lot of young people and strong domestic demand, which will provide an infinite driving force for economic growth and become an important source of confidence for the regional economy to get rid of the negative shadow of the "grey swan" this year and continue to maintain a good momentum.

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