One of the most prominent questions which chase every MD or an entrepreneur is where to invest and where to get healthy ROI. Corporate India has also gone global in its business expansion in the past 2 decades. Pre and Post-recession IFAN find that there have been many situations where Indian corporates succeeded as well as burnt their fingers. The current global climate raises one of the biggest questions for the corporate world is where to look for investments and where my fortune of business scalability lies. IFAN being a financial advisory company finds it a prudent step to enlighten its investors and all partners about the deep insights of upcoming business opportunities and guiding as pole star regarding where to look for the next exponential growth. IFAN find that collaborative economic trade policies in terms of innovation to research and execution among the Asian countries will ride the coming decade of growth.
IFAN understand and we must also understand that the developed economies have limited scope or improvisation towards infrastructure to any industry as compared to what is required within the Asian countries.
GDP
In the current scenario, IFAN finds that as Eurozone and US which are under doldrums has created enough the pressure on corporates to expand their footprints. HNI, Ultra HNI, Corporates are all keen to know where they should for the next decade of growth in the business or private wealth. IFAN finds that this is an ideal time to change one vision and look ahead in term of identification of opportunity.
Behavioural finance has been one of the favourite subjects of me as an individual author of this research insight. Every economy in every decade goes through behavioural change which leads to the growth of the society and becomes part of the Global economy. Identification of the behavioural aspect of an economy and projecting the patterns will give an early advantage to a Government to frame policies and get growth for its economy.
The Asian Economy is one of the largest economies for the global consumption map. The strength of the Asian economy is visible from the stupendous growth it has achieved in the last 2 decades (almost). In 2000, Asia accounted for 32 per cent of global GDP in terms of purchasing power parity. This share increased to 42 per cent in 2017. The collaborative business and trade opportunities lead to significant growth for the Asian economy compared to developed economies.
The next decade for the Asian Economy will be one of the fastest economic growths which will need to execute by collaboration among the Asian countries.
What do we mean by Asian Economy or Emerging Asian Economy?
Asian economy or Emerging Asian economy does not restrict to India and China alone. The countries Bhutan, Bangladesh, Brunei, Cambodia, Indonesia, Laos, Malaysia, Mongolia, Myanmar, Nepal, Australia, Japan, New Zealand, Singapore, and South Korea the Philippines, Thailand, and Vietnam are very much part of the Asian Economy. Hence Asian countries are big enough then the whole of Europe and the US in terms of population, demand and resources.
The next decade of Growth
- The Asian economy is going to be the leader behind global consumption, capital inflows, knowledge inflows and most importantly internal trade. Asia’s share of global goods trade has risen from 25 per cent in 2000–02 to 33 per cent in 2015–17. Asia now accounts for 23 per cent of capital flows, compared with 13 per cent ten years ago.
- All these numbers are only going to increase in the coming days by many folds. Corporates in India and China can easily tap the huge markets of these countries. The growing middle class is the opportunity for these companies to bring them a quality product, services and other offerings.
- These economies will be playing a significant role in demand and consumption for countries like India & China.
- These economies will be getting significant attention when the depth of technology and the internet will reach more within these economies.
- A young population, technology followed with rising middle plays a pivotal role in rising demand, entrepreneurship which leads to inflow of capital.
- As technology integration happens followed with subsequent growth in knowledge, the cultural mindset and absorption quality of new products, process etc will find significant growth. The cost of production is much lower, more investment will shift towards Asia.
- For a country like India, it has the opportunity to produce and deliver in these countries which will be a significant boost to the GDP.
- Start-ups and entrepreneurship are going to be the key game changer for the Asian Economy in the near term. Favourable government policies lower income tax and easy business rules will make things faster for the Asian GDP to grow.
The only threat is the corruption and the risk of legal engagements and delay in getting justice or resolution. A country like India needs to streamline many grey areas of business where the safety of capital and IPR is protected. India and China both face the threat of prototype products and quick resolutions of the same in the global context are the demand and saviour for these two Giant Economies.
The current growth Projects the Future
- The ROI from investments in these countries will be significant in the long term. IoT and AI will be changing the landscape of the Asian Economy in the next 5 years.
- Currently, Online travel accounts for the majority of that revenue ($30 billion) ahead of e-commerce ($23 billion), online media ($11 billion) and ride-hailing ($8 billion), and that rough breakdown is likely to be maintained up until 2025, according to the report.
- Indonesia, the world’s fourth-largest country by population, is forecast to hit $100 billion by 2025, ahead of Thailand ($43 billion) and Vietnam ($33 billion), with strong growth forecast across the board. Indonesia and Vietnam, in particular, have seen their respective digital economies more than triple since 2015, according to the data.
- These data analysis speaks that in the next 5 years these economies will be contributing significantly to the global GDP as well as the Asian economy will slowly become less reliant on US or UK economy. The young population and aspiration of raising above the middle class is the opportunity for growth.
- Collaborative business and trade will boost the Asian Economic GDP. For example, 79 per cent of Vietnam’s FDI inflows in the electronics sector between 2013 and 2017 came from South Korea, helping the country to become a hub for electronics manufacturing.
- Infrastructure is slow or rather we would term it as weak within the Emerging Asian Economies. This is an opportunity for Asian economies like India and China to invest and develop poor infrastructure. Growth of Smart Cities, innovative Universities and streamlined education will bridge the gaps of the Asian economy.
The exponential growth of Asia:
As technology develops distance will be narrowed down which leads to significant growth for the Asian countries.
As the logistics and supply of goods mature for these countries trade will grow significantly. In one word we need more Alibaba to connect the Asian.
As manufacturing and farming contribution grows the GDP growth will be faster for these economies. For example, China’s manufacturing share of GDP increased slightly, from 30 to 34 per cent.
The manufacturing share of GDP in Vietnam or Bangladesh increased from 16 per cent in 2007 to 22 per cent in 2017. This gap of growth of manufacturing in GDP gives immense opportunity to grow the business.
Conclusion:
This type of collaborative trade and investments will get growth for the Asian economy. The industrial growth of the Asian economy is not yet widespread and just concentrated on a few countries. Once the gates of manufacturing are opened up and diversification of manufacturing base is adopted the Asian countries will be enough to replace the developed economies. Innovation network between countries and entering into a bilateral trade agreement in terms of innovation is going to be a key segment for the Asian economy to grow. We don’t think that capital integration is required. We find that Knowledge and technology followed with research integration is required for the Asian economy to grow. The Asian countries need to stop doing competition among each other and should come together to develop the whole of Asian GDP growth. Asian economy will be larger than the whole of the developed economies in the coming decade.
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