Allianz expects the economic upswing in the Asian emerging market economies to continue in the year 2010, supported by an ongoing stimulus from the fiscal and monetary policy side as well as by a clear recovery in world trade. Gross Domestic Product (GDP) growth should reach 8.7 percent in China and 6.5 percent in India. Emerging Asia as a whole is likely to grow by 6.7 percent. “This means that Asia will contribute almost 39 percent to the expected increase in global economic output of 2.8 percent next year,” said Michael Heise, Chief Economist of Allianz SE.
No doubt, emerging Asia has weathered the most severe global economic downturn seen since World War II better than other regions in the world. It was affected, but nonetheless managed to avoid an outright economic contraction. Stimulated by a huge fiscal package and strong lending growth, the Chinese economy has gained momentum from one quarter to the next in 2009. Over the course of the year, one after the other major Asian emerging market country has managed to revert to growth, too. “Thanks mainly to the solid performance of China and India, regional GDP will show an increase of 4.8 percent this year. This is quite impressive, given that at the same time global economic output will contract by more than 2 percent,” Heise said. “You can call Asia, and China in particular, a relatively stable ship in stormy seas,” he added.
Major challenges ahead
In recent years economic development in the Asian emerging markets has been driven chiefly by booming exports. However, world trade should grow more moderately than before the crisis. This is largely due to the fact that the US is unlikely to re-emerge as the source of such powerful demand and import growth that it used to be. “To put it plainly, in future the US is unlikely to reprise its role as ‘consumer of last resort’ in a similar way,” Heise added. Given America’s importance as a sales market for Asian products, this inevitably implies substantial changes for the Asian growth model. If emerging Asia hopes to continue growing so buoyantly, it must focus more on domestic demand, and on private consumption in particular.
“Nevertheless, emerging Asia will continue to be the most dynamic growth region in the world,” Heise said. This also means that Asia’s share of global value added will continue to increase and hence its importance as global growth engine. In the years 2006 and 2007, when China grew with rates of more than 11 percent a year, regional growth was about 9 percent. Such rates are no longer feasible. “However, growth rates of between 7–8 percent for Emerging Asia as a region are well within reach”, Heise concluded.
Allianz Asia confident for its insurance business in 2010
Allianz is confident for its insurance business in Asia. “Asia’s growth markets have shown resilience during the crisis, and our insurance business has been displaying solid results in 2009 so far”, Bruce Bowers, CEO of Allianz Asia Pacific said. “We have taken significant steps to strengthen our operating platform across Asia over the last two years. In 2010, our focus will remain on customer service quality and the further implementation of our Group operating model ‘TOM’. We expect to continue to deliver profitability and sustainable growth in Asia.”
About Allianz
Globally, Allianz is one of the world's leading insurers and financial services providers and one of the first Societas Europaea.Founded in 1890, Allianz SE is now present in more than 70 countries with over 150,000 employees. Allianz provides about 75 million customers worldwide with a comprehensive range of services in the areas of property and casualty insurance, life and health insurance, and asset management.
Allianz SE is one of the leading primary insurers in the Dow Jones Sustainability Index. We support the principles of the Global Compact of the United Nations as well as the OECD Guidelines for Multinational Enterprises.
Munich, Singapore, December 7, 2009
Press contact:
Lorenz Weimann
Allianz Group Economics
Phone + 49 89 3800 16891
Christoph John
Allianz Insurance Management Asia Pacific Pte Ltd
Phone +65 6297 2724
e-mail: christoph.john@allianz.com.sg