Growth leaders: Our Consensus is for the South Asian economies of Bangladesh and India, plus Mongolia in East Asia, to be among the world’s fastest-growing economies over our forecast horizon to 2028, with expansions above 6% per annum. Favorable demographics, an expanding middle class, burgeoning manufacturing sectors, and—in the case of Mongolia—mining investment will spur economic gains.
China’s slowdown: In contrast, China—which in past decades has often been the region’s fastest-growing economy—will see annual GDP growth slow to below 4% in the coming years according to our analysts. Rising trade frictions with the West, population aging and decline, and less room for catch-up growth will put downward pressure on economic activity.
Middling performances in the remaining countries: Taiwan and Korea are expected to see GDP growth average slightly above 2.5% in the coming years. While both countries will be buoyed by their IT sectors—particularly their dominance in the semiconductor industry—stagnant populations and already high income levels will stunt growth potential. Plus, China could become more of a rival in the semiconductor space, at least away from the industry’s cutting edge. In a similar vein, Pakistan and Sri Lanka are unlikely to see the economic liftoff observed in Bangladesh and India despite similarly low GDP per capita, due to comparatively poor business environments.
Want to read more about the region? You can do so by visiting our website’s dedicated pages for East and South Asia, or by getting a quote from our team.
Insight from our analyst network
On Pakistan’s economy, EIU analysts said:
“Low levels of domestic and foreign investment, persistent fiscal and external imbalances and a large state presence in the economy will curb medium-term growth prospects,. The World Bank has stated that Pakistan’s nascent recovery is neither sustainable nor sufficient to address the country’s rising poverty rate, which is currently estimated at 40%.”
United Overseas Bank analysts commented on India:
“The outlook for India’s growth remains bright given the ongoing infrastructure push and existing policy schemes to drive manufacturing. The momentum in capital expenditure is likely to be sustained given the ongoing infrastructure push such as the development of roads and railways while the […] inclusion of Indian bonds into the JPMorgan GBI-EM index could drive lower the cost of funding for infrastructure projects. Policy support continues to bolster manufacturing such as the Production Linked Incentive (PLI) schemes launched in 2020 covering 14 key sectors to create national manufacturing champions and create 60 lakh (6 million) new jobs.”
Our latest analysis
The Bank of England cut interest rates in August in a divided vote; further cuts are likely ahead.
Germany’s manufacturing sector lost steam in July according to survey data.