Domestic demand will fuel Asean

Business Times: Tue, Sep 20
ASEAN’S growth will increasingly be led by domestic consumption instead of exports, Centre for Economics and Business Research (CEBR) chief executive Douglas McWilliams said yesterday. And Singapore, at the heart of this region, will grow four time…

ASEAN’S growth will increasingly be led by domestic consumption instead of exports, Centre for Economics and Business Research (CEBR) chief executive Douglas McWilliams said yesterday.

And Singapore, at the heart of this region, will grow four times as quickly as Switzerland, whose economy is similar but lies across the seas in troubled Europe, the founder of UK-based economic consultancy CEBR said.

Speaking to reporters after the launch of Institute of Chartered Accountants in England and Wales’ (ICAEW) quarterly Economic Insight report on South-east Asia, Mr McWilliams, who is also ICAEW’s chief economic adviser, said that he expects Singapore to grow at an average of 4 per cent a year over the next five years, compared to just one per cent a year growth year for Switzerland.

Comparing the two for their similar levels of prosperity, economic policies and industries such as pharmaceuticals, high-tech electronics manufacturing, and financial and business services, Mr McWilliams stressed: ‘Location, location, location.’

‘Singapore’s in the world’s fastest growing region, Switzerland is in the world’s slowest growing region,’ he said.

The report released yesterday said that Asean’s exports to China have risen more quickly than exports to its other major trading partners. And this will continue, with India likely to take over as a fresh engine of exports growth once China’s ageing population slows its economy from about 2030.

But Asean will rely more heavily on domestic consumption in coming years, the report said, estimating that the swelling middle class in Indonesia, Malaysia and Thailand may lift private expenditure growth to more than 5 per cent a year.

Singapore’s growth will be driven ‘by the fact that the region in general will continue to be prosperous’ and boosted by supply-side factors such as quality education producing better skilled workers, Mr McWilliams said. He added that he does not expect Singapore’s recent tightening of foreign worker policies to disrupt growth much, and forecasts gross domestic product (GDP) growth of 4.9 per cent this year and 4.2 per cent next year.

As for the ongoing debt crisis in Europe, Mr McWilliams thinks that the scenario most likely to pan out is a break-up of the current eurozone into a two-tiered system separating stronger economies from the weaker ones.
Source: Business Times © Singapore Press Holdings Ltd

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