‘ASIA TO DOMINATE 7PC GROWTH CLUB’
India, Bangladesh, Vietnam, Philippines seen among nations in exclusive list in the 2020s
THE 2020s are set to be the Asian decade, with the continent dominating an exclusive list of economies expected to sustain growth rates of around seven per cent.
India, Bangladesh, Vietnam, Myanmar and the Philippines should all meet that benchmark, according to a research note yesterday from Standard Chartered’s (StanChart) India-based head of thematic research Madhur Jha and global chief economist David Mann.
Ethiopia and Ivory Coast are also likely to reach the seven per cent growth pace, which typically means a doubling of gross domestic product (GDP) every 10 years. That’ll be a boon to per
capita incomes, with Vietnam’s soaring to US$10,400 (RM43,267) in 2030 from about US$2,500 last year, they estimate.
The South Asian members of the group should be GDP standouts as they’ll together account for about one-fifth of the world’s population by 2030, StanChart reckons. The demographic dividend will be a boon for India, while Bangladesh’s investments in health and education should juice productivity.
The Asian dominance of the list is a change from 2010, when the bank first started tracking the economies it expected to grow by around seven per cent. Back then, there were 10 members evenly split between Asia and Africa: China, India, Indonesia, Bangladesh, Vietnam, Nigeria, Ethiopia, Tanzania, Uganda and Mozambique.
China is a notable absence from the latest ranking after being a member of the club for almost four decades — reflecting a slowdown in growth and a progression towards higher per-capita incomes that makes faster growth rates more difficult to sustain.
StanChart estimates the world’s No. 2 economy will keep up a 5.5 per cent economic growth pace in the 2020s.
Sub-Saharan African countries also have faded, which the analysts attribute to “waning reform momentum, despite a slowdown in commodity prices”.
While faster economic growth isn’t a panacea — think income inequality, crime, pollution — it tends to come with a lot of positive knock-on effects, Jha and Mann wrote.
“Faster growth not only helps to lift people more quickly out of absolute poverty, but is also usually accompanied by better health and education, as well as a wider range of — and better access to — goods and services,” they say in the report.
“Higher incomes resulting from faster growth also usually reduce socio-political instability and make it easier to introduce structural reforms, creating a virtuous cycle.”
In addition, seven per cent club members tend to have savings and investment rates of at least 20 to 25 per cent of GDP, according to the report.