Cover story – Asia
ASIA EASTERN PROMISES
“The West is the best, the West is the best,” sang Jim Morrison on The Doors’ 1967 track, The End. Few people at the time would have argued with him. Booming economies, lavish lists of investments and rising living standards all pointed to the West leaving the rest of the world behind. But that was a long time ago. Today, the modern equivalent can be found in the opposite side of the world. It is now time to look East. The rise and rise of Asia has been powered by Taiwan, Singa- pore, South Korea and, of course, strongly carried forward by the growth of the population giants: China and India. From here, the growth of Asia, it is said, will be led primarily by India. A point supported by the International Monetary Fund (IMF), which has seen enough to raise its 2023 growth forecast for the country to 6.1%. This boosts expectations that India will be the world’s fastest growing economy this year. The IMF says its upswing revision was guided by strong growth in last year’s fourth quarter. This will only get better as the IMF sees India’s economy expanding by 6.3% in 2024. This is at a time when the West celebrates any form of growth, no matter how miniscule. Fitch’s credit downgrade of the US in August has added to concerns about the Western economy. Gustavo Medeiros, Ashmore’s head of research, believes that
16 | portfolio institutional | September 2023 | Issue 126
India is very much in vogue due to a combination of positive demographics, structural reforms and a favourable geopolitical position, which supports investment in the country. Added to that, India has an enviable scale. All of this amounts to it being one big engine of growth. This is a point shared by Vivian Lin Thurston, partner and portfolio manager at William Blair. She says growth in India is being driven by a confluence of strong structural factors including, to some extent, a low base in terms of total GDP and per capita GDP, meaning “there is a lot of headroom for busi- ness for growth”.
Land of plenty
This is backed up by the favourable demographics assessment, with a fast growing and young population and a vibrant private sector as well as an entrepreneurial and increasingly well-capi- talised market economy. It also enjoys what appears to be a friendly and stable relationship with the US and the West. “It is fair to say that the quality of India’s GDP growth has been improving, with a higher share of investment going into man- ufacturing, which typically has a greater impact on the rest of the economy,” Medeiros says.
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