A game of truths in Asia

The headlines are hard to miss:  Asia is slowing. Growth is drying up. Trade wars are not helping. The sky over an entire continent is on the precipice of falling.

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In April the International Monetary Fund (IMF) cut its global growth forecast to 3.3 per cent for 2019, down from 3.5 per cent in January. In October it was 3.7 per cent. Asia has been the world’s growth engine for some time, now it is slowing.

"Businesses can't make informed decisions unless they look more closely at what’s happening in individual markets.”

So what is this “Asia”? Asia – and we must always stress this – is not a single economy. There is no such thing as the “Asian economy”. Rather there are many economies within Asia - wildly diverse ones at that.

At ANZ we deal with a wide range of customers from diverse geographic backgrounds. We don’t need to tell our Asian-based customers to approach individual markets differently. But the message – for whatever reason - doesn’t always make it to the antipodes. Somewhere on the plane south east reality morphs into a fiction about a homogenous place that doesn’t exist.

For our Australian and New Zealand customers there is a key message: don't think about Asia as one market. That means don't get caught in the headlines about China. Don’t be put off by the ‘Asian slowdown’.  Don’t be scared away by the trade war.

It’s tough. The sheer size of China’s economy means its performance (and outlook) will always weigh disproportionally on the region. Suddenly promising numbers from smaller players get lost in the big picture.

We’re not saying the picture is all rosy. What we’re saying is businesses can't make informed decisions unless they look closely at what’s happening in individual markets.

Look around

At ANZ we encourage customers to think about diversification opportunities in Asia. Finding what works for an individual business will vary depending on industry, risk appetite and preferred business models.

While I emphasised at the onset it’s wrong to think of the enormously diverse Asian region as a single economy, the macro-economic data reinforces the sheer scale of the opportunity the region presents as a whole. As a market, the Association of South East Asian Nations (ASEAN) is the fifth-largest economy and the second-largest recipient of Foreign Direct Investment (FDI) in the world. The region’s population stands at 650 million and is growing by seven million a year.

Growth across the largest six countries in ASEAN is consistent at around 5 per cent. Australia and New Zealand would both leap at such figures. Forecasts suggest gross domestic product in the region could reach $US10 trillion by 2030.

FDI into the region in 2018 came in at record highs. Amid all the noise around a reversal in globalisation and inwardly focused nations, there are countries in south-east Asia taking advantage of the change.

The key driver in south-east Asia is change. An increasing population is leading to urbanisation which is in turn driving consumer and domestic consumption. Consumers are changing their habits as affluence and standards of living continue to rise. These trends are in place and talk of tariffs is not going to stop the desire for better food quality and safety standards.

For business – and investors – success is to be found scanning different markets for the opportunities most applicable to their own strategy.

If you take the time, you’ll find the opportunities in south-east Asia are diverse. Consider these two economies and the opportunities they offer.


The Vietnamese economy grew by 7.1 per cent in 2018. In the first quarter of 2019, GDP again expanded 6.79 per cent. It’s one of the most-interesting economies in the region – a market of 90 million people with a median population age of 30.5 years and very high level of literacy.

This outstanding growth is the result of years of work by investing in areas it knew it needed to drive its economy. This includes signing a number of free trade agreements; 11 at last count.

If you've been to Vietnam in the past it’s advisable to not let your thinking be shaped by what you saw 20 or even 10 years ago.

Modern Vietnam is focused on developing infrastructure, standardising its border activity and creating a framework for attracting foreign-direct investment. And that's really driven some massive changes.

No longer simply the world’s textile factory, the number-one export out of Vietnam is now mobile phones. Vietnam manufactures one in 10 of the mobile phones produced in the world. It represents 21 per cent of the country’s total exports.

In recent years South Korean electronics giant Samsung has invested tens of billions of US dollars into Vietnam, with plans for more.

In other industries, the Mekong Delta is among the most-productive regions in agriculture and aquaculture on the continent. The country is also blessed with a maturing consumer services sector, sound manufacturing fundamentals and numerous infrastructure opportunities.

The key driver of all this change in Vietnam is a well-educated young workforce supported by robust infrastructure that has created an ecosystem of opportunities for business to tap into.


India is getting easier to navigate and harder to ignore.

An economy of 1.3 billion people with a GDP growing at 7 per cent is not to be dismissed. Advances in the use of technology in India are happening at a scale unseen anywhere else and it is creating a vast array of business opportunities.

India is no longer held back by legacy or structural decisions because of these new technologies and the need to think differently.  It has scale. It has demand. It has increasingly deep-pocketed consumers.

We’ve said things in the past like Australia and New Zealand are underweight India. For such a large economy it’s been comparatively overlooked. The reasons are complex; an obvious one is a lack of FTA deals (which both Australia and New Zealand have with China, for instance). China is also easier to get to through a direct flight.

With the recent changes some of the complexities of India have dissipated. The country has effectively taken away its borders at state-level yet and introduced a goods-and-services tax. It has harmonised its sales taxes within the regions, something businesses used to find very hard to understand.

So India is getting easier. The market is growing. And of course, like Vietnam, India is not really a topic of the trade tensions between China and the US. In fact, anecdotally it's one of the markets businesses are looking to shift their supply chain to in the wake of the tariffs.


Inevitably there will be businesses whose supply chains through Asia face difficulties related to the trade war. The good news is there are natural alternatives in the region if you know where to look.

Vietnam and India are two of the more well-known locations in a broader south-east Asian region well-suited as an alternative. Don’t make a judgement on Asia based on what is in the headlines – take the time to look deeper into what is on offer.

Across ASEAN, increasing urbanisation, growing income and evolving consumer demands are supporting changing expectations around infrastructure, energy and education, leading to modern economies which are ripe with opportunity.

While there are as always plenty of reasons to exercise caution in certain markets and industries, there’s also a lot of opportunity being created as trade and investment flows adapt to a changing global landscape and as the underlying engines of growth in some of these developing nations accelerate.

Rising trade tensions are unwelcome but businesses will respond and adapt. Supply chains will shift and this will create opportunities for those who are able to take advantage of them. That’s where the diversity of the “Asian economy” becomes an advantage.

ANZ celebrates 45 years in Singapore

ANZ established a presence in Singapore in 1974, a strategically important step in ANZ’s history and role as a trade bank. Over that time, the bank has built a strong presence, connecting businesses to trade and capital flows across the Asia Pacific and Australia and New Zealand.

For ANZ today, Singapore is integral to a focus on helping Australian and New Zealand businesses expand into ASEAN, while supporting corporate and institutional customers who use Singapore as a hub for international business. ANZ Singapore is one of two key regional business hubs for ANZ, offering a full range of products for corporate and institutional customers.

David Green is CEO Singapore and Head of South East Asia, India & Middle East at ANZ

This article was originally published on ANZ’s Institutional website.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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