Asia-Pacific: Cautiously Optimistic
Asia continues to lead and remain as the most dynamic part of the global economy but is bearing the brunt of the downside from a still weak global recovery which is slowing global trade. The Asia-Pacific region is cautiously optimistic and continues to expect a steady rate of growth of around 5% in 2017.
Impact of external factors
Although in most regions the intrinsic strength lies in its strong domestic market, the region is still vulnerable to what happens in the global economy and political changes in the global arena. Factors worth mentioning would be a hike in interest rates by the US Federal Reserve, the economic slowdown in China and the fear of greater protectionism from the US government under its newly elected President Donald Trump.
It will also be interesting to follow up on the election results in France and Germany in 2017. These two countries are the backbone of the European economy and their policies will impact many countries, including Indonesia. And let’s not forget “BREXIT”, which many fear could further slow global and European economic growth.
To strengthen its resilience to global risks and remain a source of dynamism it is hoped that policymakers in the region will push ahead with structural reforms to raise productivity and create fiscal space while supporting demand as needed.
Highlights around the region:
- Australia and New Zealand will likely deliver positive growth in 2017, with their economies underpinned by the stabilization in commodity prices and with housing cycles slowing in a controlled fashion.
- Indian GDP growth is expected to show a moderate improvement from 6.9% in 2016 to 7.4% in 2017, despite its demonetization exercise in November.
- Indonesia’s growth continues to remain steady. The World Bank forecasts that Indonesia’s economy will grow by 5.3% in 2017. This is higher than the average economic growth of emerging economies of 4.4% and the global economy of 2.8%.
- For Japan, recent GDP developments are positive; the weakening in the Japanese yen following the U.S. election provides some headroom; however growth is forecast to grow at around 1% in 2017, similar to 2016, as factors such as demographic ageing and the high level of government debt continue to be a drag on Japan’s potential growth rate.
- It is expected that China will aim for economic transition toward more sustainable growth. This will be critical over the medium term for both China and the global economy. Overall, the region has become more sensitive to the Chinese economy. While the process of transition and rebalancing will have medium-term growth benefits, there are likely to be adverse short-term effects impacting clients more dependent on China’s consumption demand.
In the Executive Search & HR Consulting business, we are seeing a trend among companies from Europe and the U.S. seemingly reluctant to hire expatriates for senior positions and placing greater emphasis on hiring locally. As a result, the increasingly well-educated and skilled talent pool in ASEAN is important to these companies’ ability to expand their investments in the region. In high demand are Executives with strong leadership, creativity, analytical problem-solving, technical skills, and effective communication.