China and ASEAN look set to lead global economic recovery despite a foggy road ahead.
“ASEAN and China are coming back into the market at a very structured and measured pace.”
Economic fragilities in many regions are increasing with every passing week and alchemy of financial markets has changed dramatically. Global economy continues to stay on a volatile and ambiguous growth mode. Advanced economies are battling with Covid-19 and the pandemic is making an impact at various levels and disrupting many industries, thus creating massive unemployment. Emerging markets and ASEAN are performing relatively better than many economies around the globe. China has come out strong economically and moving ahead with solid aggregate demand.
The question on most investors’ mind is: ‘When will we get out of the recessionary phase?’
The answer: It’s a long haul and governments are trying their best to maintain macroeconomic stability which is not easy at the moment. Globally, governments are using an amalgamation of fiscal and monetary policy to bring economic confidence back to the economy to ward off a recessionary circle.
The global monetary system is on the verge of derailment and is looking for a new system which can bring stability to the financial system. So what are the key indicators showing the gravity of the situation globally?
GLOBAL MACROECONOMIC CHALLENGES
1. Sovereign bonds are trading in negative territory, roughly US$17.3 trillion.
2. Negative and low interest rate regime in the financial markets.
3. Geopolitical and strategic risk – GCC, China vs USA, North Korea.
4. Policy uncertainty risk and cost – EU/Japan/USA policy makers are panicking.
5. Deflation threat – Consumers are losing confidence in the government thus aggregate demand gets abysmally low.
6. Pandemic risk is making huge impact across various economies and leading to sub-par growth.
“It’s a long haul and governments are trying their best to maintain macroeconomic stability.”
• DOLLAR PERFORMANCE IN JULY
ECONOMIC PIVOT TOWARDS ASIA
Asia is the future. ASEAN and China are coming back into the market at a very structured and measured pace. Governments are in total control of the economies and aggregate demand is moving strongly with consumption of real estate, cars and consumer goods in great demand. Savings to GDP ratio is higher than many advanced and developed economies.
We, at Juwai IQI, are optimistic on the economic outlook of ASEAN and China due to 4 reasons.
1. Macroeconomic stability
2. Productive labour force
3. Modern infrastructure
4. Policy framework consistency
We foresee more and more global investors moving their funds to ASEAN and China regions as growth momentum gathers pace and generate economic prosperity for the masses at the macro level.
Jim Rogers said, “The 21st century belongs to Asia and she is going to drive the growth of the global economy because of solid macro fundamentals embedded into the economy.”
Speaking at the PNB summit in October 2019, I have shared the same. Asia is the future and growth engine of the global economy as we navigate through turbulent times in the modern era.