The President of the Asian Development Bank, Takehiko Nakao, noted that Asia’s share of the world economy had risen from 20% in 1990 to nearly 30%. He said that Asia had contributed more than half of the world’s growth since 2007, while simultaneously making a huge reduction in poverty levels. It could account for more than half of the world’s production by 2050.
“Yes,” he admitted, “we have to accept that the era of 10% annual growth in China or 8% growth in India is behind us. But there are two things to remember: first, despite the moderation, growth remains robust by anyone’s standards and, second, this moderation is occurring alongside the critical structural reforms needed for the sustainability of robust growth in a more equitable and environmentally sound fashion.” This is sweet music to African ears – robust Asian growth translates into robust African growth.
Professor KC Chan, secretary for financial services and the treasury, HK SAR, said that, even as the US and European recoveries gain traction, Asia will continue to lead the world in growth.
But the timing of the US unwinding its monetary stimulus looms as the greatest challenge. “While the global financial markets appear to have taken the announcement of tapering in stride, no one can assume a smooth ride ahead on the road to recovery. Indeed, the only certainty for 2014 is more uncertainty.”
Extending the theme, Do Hoang Anh Tuan, deputy Minister of Vietnam’s Ministry of Finance, said the global recession had forced his country to carry out a comprehensive restructuring of its economy and financial services. Vietnam has embarked on a sustainable turnaround of exports – up 14.4% in 2013. Inflation had been curbed from 18% five years ago to 7% last year, and state-owned enterprises were being reformed, he said.
Levin Zhu, president and CEO of China International Capital Corporation, put the current situation within a global context. He said, “Asia, as a bloc, has an economy of $25 trillion. In contrast, the US, the largest single economy, has an economy of $16 trillion or $17 trillion, while Europe, the entire continent, is about the same size as the US.”
He pointed out that recovery from the 1997 Asian crisis took three or four years, while recovery from the global crisis of 2008 has taken longer.
“While we are now seeing light at the end of a dark financial tunnel,” he said, “the world has changed a great deal in that time. I call the current period ‘the Asian Development Era’.”
There were interesting responses to polls carried out among the conference participants. In one, audience members were asked, If you had $100m to invest in real assets, where would you spend it in Southeast Asia? Malaysia came out on top, with 33.5% of the vote, followed by Indonesia, with 23.5% and Vietnam, with 15.6%. Myanmar dropped to 11.8% from 21.7% last year.
A second audience poll asked, Which sector in Asia will show the biggest growth potential in the next five years? Telecom, media and technology topped the poll, with 25.3% of the vote, with healthcare coming a close second. Finance, 15.2%, green industries/environment, 11.9% and consumer products 11.3% followed, with food and agriculture 8.6% and real estate 3.3% bring up the rear.
In an interactive electronic poll, nearly 40% of audience members said they were optimistic in their outlook for global economic performance in 2014, while only 10.8% were pessimistic; the rest were neutral.
On another question, participants felt that the greatest risk to the global economy this year would come from US monetary tapering. The second-biggest risk, according to the vote, would be a hard landing of the Chinese economy, followed by structural issues in emerging-market economies.
The risk of least concern among the four choices was a relapse of the European sovereign-debt crisis. This was in contrast to the response to a similar question posed at last year’s AFF, when the biggest fear was a worsening of the Eurozone crisis.
The Asian Financial Forum made for a very refreshing change, both in the focus of discussion as well as the mind-set, from the African agenda I am more familiar with. While there was not much African representation this time, the fact that I was invited in my capacity as editor of African Banker is a clear signal that Africa is very much in the mix as far as HK is concerned.