Asia: Expect growth to be roughly steady – Goldman Sachs

Research Team at Goldman Sachs expects Asia ex Japan growth to slightly accelerate from 2016 (their latest estimate for 2016 real GDP growth is 5.9%), most of this is driven by an expectation that India’s growth will rebound significantly after the near-term blow from demonetization is absorbed and cash levels return to normal.

Key Quotes

“However, the full ramifications of the reform are still very uncertain, and we are much more confident about the extent of the near-term weakness in India than the pace of the rebound.”

“In Japan, we expect growth of 1.2%, versus 1.0% in 2016, as the country benefits from better global activity, easier financial conditions, and somewhat more supportive fiscal policy. In China, the challenge of maintaining high growth while attempting to fend-off financial and other risks is likely to intensify and the economy should decelerate slightly in 2017.5.”

“In Indonesia and the Philippines, we expect growth to remain robust in 2017, although much depends on domestic policy and the implementation of economic reform.6. For the smaller open economies of Asia, the benefits of better growth in the rest of the world may be limited by export competition from a slowing and depreciating China, as well the possibility of greater US protectionism. These economies could also face challenges from a rising global rate environment and a stronger dollar.”