Unleashed In The East: Investing In Asia 2013


Image by: World Economic Forum
By Steven Morrison II

As a region, Asia has watched as its economic growth has exploded into the young decade. That growth has paid off handsomely for people in the region as well as timely investors who did their homework and put their greenbacks to work in the most populous continent in the world.

But 2013 is creeping up and that’s a whole new ballgame if news reports are any indication. Many new variables have been introduced into the equation, so to speak. So the big question is, will that strong growth trend continue into 2013?

Analysts say a resounding “yes.” Sure, there are fiscal cliffs to be navigated in the U.S., political upheavals to settle on the continent, and societal shifts to be weathered in key regional players over the next 12 months, but overall, experts don’t see these factors as having a particularly heavy drag on Asia’s churning economy.

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“[Asian] growth in 2012 will continue at the same pace as in 2011, and then rebound in 2013,” announced Naoyuki Shinohara, the International Monetary Fund’s (IMF) Deputy Managing Director, during a speech in The Philippines in May of this year. That’s Shinohara pictured above, the photo taken in June 2011 in Jakarta, Indonesia, during the World Economic Forum on East Asia.

“This forecast, however, reflects a combination of considerably lower growth in Emerging Asia — particularly in the first half of 2012 and in the more open and trade-dependent economies — and a sharp rebound in Industrial Asia,” he added.

Bounce Not Quite As Big

But that rebound is not looking to be as big as was once expected. Fiscal consolidation, bank deleveraging, and “downward pressure” on U.S. housing prices will weigh heavy on the global economy as a whole, said Shinohara. That global financial triple ripple will be one of several in a series of punches hitting Asia and the rest of the global economy squarely in the jaw next year. Another blow is the plethora of political shifts currently occupying  key players in the region, including China and Japan.

All of this caused the Asian Development Bank (ADB) to edge down its 2013 forecast for Asian economic growth (minus Japan) by half of a percentage point last month, and also signaled inflation would fall to 4.2%, from a previous projection of 4.4%.

And they also expect India to bounce back in 2013, but again, not as much as was originally thought. Thailand will also continue to be a hot spot, although growth forecasts are down 1.4% in 2013 when compared to 2012 projections.

Overall, analysts see real estate as a good investment, especially in Indonesia. It all adds up to another good year for smart and aggressive Asian market players.


Image by: Dennis Jarvis

China

But not in China, where the real estate market is in shambles. Once a bright shining star, China is now experiencing all kinds of growing pains, and consequently many investors are souring on Big Red investment opportunities. Others problems persist such corruption, favoritism and a new emerging class of financially successful who demand a better quality of life from their leadership.

In other words, caution is the new rule of the day when it comes to China.

“I recommend that businesses with a heavy exposure to the Chinese economy do some contingency planning for a Chinese slump …” offered Forbes contributor Bill Conerly. “… Not because I anticipate a recession there this year, but because the country will certainly stumble sometime in the next five years.”

The signs are everywhere that China will see a modest, but smaller-than-needed increase in growth in 2013. ADB predicts that China’s seesaw ride will indeed continue in 2013, with the growth rate falling somewhere between 2011’s 9.3% and 2012’s 7.7%.

We’ll all be keeping an eye on China.