Weekly Commentary – Economic Outlook of Asia Pacific in Year 2013
ASEAN is one of the best performing economies in the world since the financial tsunami in year 2008, despite the lackluster performance of the global economy. In the latest forecast report by the World Bank, it predicts the region will grow by around 7.9 percent in Year 2013. The growth rate is still higher than most of the world. Economists expect the growth rate is around 2 percent in U.S. and around 0.5 percent in Europe next year.
Domestic consumption and the intra-region trade support the economic growth in the region. ASEAN–China Free Trade Area (ACFTA) came into effect in year 2010. The free trade agreement reduced tariffs on more than 90 percent of imported goods to zero and promoted the trade activities between ASEAN and China. In year 2012 January to October, the growth of trade volume between China and ASEAN countries are 9.4 percent and supported the economy of ASEAN. Meanwhile, the growth of total trade volume of China just grew by 3.1 percent in the same period. As Chinese economy is close to its bottom and regain momentum, most of the economists are optimistic to the economy of ASEAN next year.
However, investors should aware ASEAN markets outperformed global market over last 4 years, and the valuation of equity markets in Thailand, Philippines and Indonesia are no longer cheap compared to their historical averages. As global economy is expected to pick up next year and the risk appetites of investors return, investors are likely to bet on the under-performed markets. ASEAN markets may not able to repeat its outstanding performance in Year 2013.
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