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By: Sarah Boumphrey

Quality counts in economic growth. The headline figures are interesting and important, but the trends beneath this are what really counts – particularly in a world of increasing uncertainty.

Take Indonesia and the Philippines. Two emerging Asian economies, which have seen impressive rates of growth in recent years. Yet beneath the top-line figures there are striking differences.

Indonesia-Philippines-1

Although unemployment is higher in the Philippines; inflation, the government budget and the current account are all in a stronger position. Robust growth is broad based, supported by post-typhoon reconstruction and consumer expenditure, in turn supported by remittances. On the other hand, weak commodity prices have put pressure on Indonesian exports and in turn the current account deficit. Indonesia lacks competitiveness in exports outside of commodities and this must be remedied for long-term sustainable growth.

The same thought process must be applied to China. China’s real GDP growth is expected to come in at “just” 7.1% this year, even so in US$ terms this is the equivalent of an expansion the size of the economy of Saudi Arabia or Switzerland. Beyond this, if this growth is more sustainable – based less on investment and more on consumption – then 7.1% is better than 10%.

In short, markets which are sizeable, strong growing and stable offer the best rewards. It’s easy to get swayed by the headline figure, but when planning for the long-term business should focus on stability just as much as speed.

If you’re interested in hearing more tune into our free webinar on Thursday 19th February at 9 a.m. CST / 3 p.m. GMT.

 

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