Reflecting the modest and uneven improvement in global economic activity, recent indicators for Asian economies have been mixed, with the positive regional impact of stimulus efforts in key countries somewhat negated by unusually volatile currency and financial market activity that is partially catalyzed by concerns about tapering of Federal Reserve bond purchases, according to a report from the Manufacturers Alliance for Productivity and Innovation.
In a new semiannual MAPI analysis, the Asian Manufacturing Outlook reports on three main areas: Japan, South Korea and a group identified as “developing Asia” comprised of China, India, Indonesia, Malaysia and Thailand.
Co-authors senior economist Cliff Waldman and economist Yingying Xu, Ph.D. note that forecasters expect a modest acceleration of GDP growth in Japan, from 1.9 percent in 2013 to 2.1 percent in 2014, as a result of the positive impact from wide-ranging stimulus programs in one of the most rapidly aging major economies. Japan’s manufacturing output is anticipated to contract by 0.5 percent in 2013 before accelerating by 4.3 percent in 2014.
The less developed South Korean economy, with its markedly younger labor force, is expected to experience a stronger acceleration of GDP growth, from 2.7 percent in 2013 to 3.5 percent in 2014. Manufacturing production will gain momentum as well when both domestic and external demand pick up strength. South Korean industrial production growth is expected to be just 1 percent during 2013 before rising to 4 percent in 2014.
Waldman and Xu envision slower growth in China as the country “confronts a sluggish world economy, increasingly difficult demographic challenges impacting labor supply, and the need to rebalance the sources of growth from exports and fixed asset investment to domestic private consumption.”
Activity in the economies of the other countries in developing Asia reflect the mixed global and Chinese pictures, with the exception of India, whose structural difficulties Waldman and Xu write “are bubbling to the surface and giving rise to an unusually weak picture and significant diminishment of international investor confidence.”
GDP growth in developing Asia is predicted to accelerate modestly from 6.3 percent in 2013 to 6.5 percent in 2014, slower in both years than the 6.9 percent growth in 2012. This grouping’s industrial production growth is anticipated to advance from 7.8 percent in 2013 to 8.1 percent in 2014.