Falling oil prices will substantially benefit the region, reducing transport costs, boosting production, and fostering economic growth
The outlook for emerging Asia-Pacific countries such as Indonesia, Malaysia, Thailand and Vietnam appears positive, sustained by declining oil prices, a recovering United States economy, and growth-oriented government policies. The gain from oil prices, however, is anticipated to be offset by a fall in exports and reduced investor confidence due to the lackluster medium-term outlook in leading Asian economies such as China and Japan.
New analysis from Frost & Sullivan, Global Economic Outlook 2015: Emerging Asia-Pacific (http://www.frost.com/q294278193), finds that government focus on regional and global integration through foreign trade agreements is likely to improve the trade climate in the region. This will help promote exports while meeting import requirements for raw materials and capital goods.
"Since emerging Asian economies are net importers of oil and gas, they will benefit from the sharp decline in energy prices," said Emerging Market Innovation Research Analyst Debanjali Sen. "In addition, low oil prices will considerably reduce fuel costs for consumers, increasing disposable incomes to be spent on goods and services and thus bolstering production."
Despite several roadblocks, business climate as well as investor confidence in the emerging economies of Asia-Pacific will look up:
Indonesia:
The Indonesian economy is expected to recover in 2015 owing to the implementation of policies related to infrastructure development. Although the underperformance of the manufacturing sector will curtail the country's short-term industry outlook, the scenario will change soon as key export markets rebound.
Malaysia:
Malaysia's economic outlook remains bright as the recovery of important trading partners like the United States will propel growth in the manufacturing sector. Strong incentives announced in the budget for 2015 will support efficient private sector management, automation in manufacturing processes and high-quality investment inflow into the economy.
Thailand:
Thailand registered a substantial slowdown earlier in 2014 due to political unrest and delay in the deployment of planned infrastructure projects. The country's GDP is expected witness signs of improvement in 2015 as the political situation eases and export demand goes up.
Vietnam:
The Vietnamese economy will record notable growth in 2015. Although the problem of non-performing loans remains a challenge, government measures to revamp the financial sector will offset this restraint. The outlook for the construction and real estate sectors is upbeat.
"Overall, emerging Asia-Pacific economies will pull through significant global challenges and come out stronger than major Asian economies, driven mainly by improvement in investor confidence, higher domestic demand, and strong manufacturing growth," concluded Emerging Market Innovation Industry Manager, Rituparna Majumder.
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