Asian economies look to dominate 7% growth club

Bloomberg

Tue, May 14, 2019 - Page 10

The 2020s are set to be the Asian decade, with the continent dominating an exclusive list of economies expected to sustain growth rates of about 7 percent.

India, Bangladesh, Vietnam, Myanmar and the Philippines should all meet that benchmark, according to a research note on Sunday from Standard Chartered PLC’s India-based head of thematic research Madhur Jha and global chief economist David Mann.

Ethiopia and the Ivory Coast are also likely to reach the 7 percent growth pace, which typically means a doubling of GDP every 10 years.

That would be a boon to per capita incomes, with Vietnam’s soaring to US$10,400 in 2030 from about US$2,500 last year, they estimated.

The South Asian members of the group should be GDP standouts, as they would together account for about one-fifth of the world’s population by 2030, Standard Chartered said.

The demographic dividend would be a boon for India, while Bangladesh’s investments in health and education should juice productivity, it said.

The Asian dominance of the list is a change from 2010, when the bank first started tracking the economies it expected to grow by about 7 percent.

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 economic growth and a progression toward higher per capita incomes that makes faster growth rates more difficult to sustain.

Standard Chartered estimated that China would keep up a 5.5 percent economic growth pace in the 2020s.

While faster economic growth is not 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 said.

“Higher incomes resulting from faster growth also usually reduce sociopolitical instability and make it easier to introduce structural reforms, creating a virtuous cycle,” they added.