Asia needs to prove its resolve in 2017 – HSBC

Frederic Neumann, Research Analyst at HSBC, suggests that at the turn of the year, Asia’s economies appear remarkably resilient but looks can be deceiving.

Key Quotes

“Beneath the surface, challenges to growth and prosperity are mounting. 2017 is the year when Asia needs to show resolve and tackle long needed reforms. Alas, the political calendar renders this unusually tricky, raising the risk of further policy paralysis and economic stagnation for years to come.”

“A tricky calendar. Political realities, in short, mean that reform momentum may not turn out to be overly aggressive in 2017 despite deteriorating economic fundamentals. For the past several years, easy financial conditions helped the region to muddle along. However, the path to continued prosperity is rapidly narrowing in Asia. Only a determined reform push can ensure the growth endures.”

“None of this is to say that Asian growth will stall entirely this year, or that sudden financial stress will erupt. The region maintains sizeable buffers against external headwinds. Even if growth is unlikely to accelerate, it still remains higher than in most other regions of the world. The concern, rather, is that another year of steady, if uninspiring, growth, will reduce the sense of urgency to implement the reforms that are needed to sustain the region’s march towards greater prosperity. The tracks will need to be laid now, and the hope remains that courage triumphs in the face of political uncertainty.”