SINGAPORE, DECEMBER 14, 2009 Asia has the ability to emerge from the recession faster than the US, according to the 2009 Asia business council members' survey conducted between June and August 2009. The majority of members believe the worst is over and 67 per cent of respondents said they expect business conditions in Asia to improve.
Fifty two of the total 70 members responded to the questions covering areas such as perceptions of the economic outlook, investment plans and energy and environmental issues. Despite their overall optimism, a third of the respondents indicated fear of a possible prolonged recession and consider that to be the biggest economic problem in Asia.
Asians save more
Members of the Asia business council are feeling good because of the reported GDP rates of China, Indonesia, South Korea and Singapore in the second quarter of this year. These rates grew by an average annualised rate of more than 10 per cent in the said period.
The swift implementation of Asian governments' economic stimulus packages aided the recovery of Asian economies. These packages accelerated public and private consumption, in the form of public investment and consumer spending, respectively.
Asian economies are characterised by high savings rates and resultant liquid economies. Therefore these economies can support domestic spending, healthier banks, and manufacturing-driven industries.
Officials of the Asia business council note that economies driven by government stimulus may not last a very long time and suggest that export-reliant Asian economies shift toward private consumer-driven models. This has become more important given the increase in the US savings rate and decline in export demand.
Asian economies can flourish more in the long term if there is adequate growth in domestic consumption. But consumer spending in Asia may not be a very high rate due to rising unemployment rates and falling wages.
More investment since 2007
China, India, and Indonesia will together generate US$10 trillion of wealth for investors by 2015. Members were more inclined to invest in China and India in the last four years but Indonesia also seems to be an investment hot spot. It has become the third top investment location and has succeeded in surpassing Vietnam for the first time.
The telecommunications sector attracted the largest foreign investments. The pharmaceuticals, construction, metal and electronic industries were other sectors of high interest to foreign investors.
The Asia business council members emphasised the importance of being ready for business opportunities. They think that higher oil and gas prices will increase the operating costs of businesses. The members are also concerned about unemployment and the widening wealth within some of Asia's domestic economies, and observe a lack of passion, will and wisdom on the part of some state leaders to deal with these issues.
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