News analysis

Asia set to dominate '7% growth' club during 2020s

The 2020s are set to be the Asian decade, with the continent dominating an exclusive list of economies expected to sustain growth rates of around 7 per cent.

India, Bangladesh, Vietnam, Myanmar and the Philippines should all meet that benchmark, according to a research note released on Sunday by Standard Chartered's India-based head of thematic research Madhur Jha and global chief economist David Mann. Ethiopia and Cote d'Ivoire are also likely to reach the benchmark.

A 7 per cent growth pace typically means a doubling of gross domestic product (GDP) every 10 years. That will boost per capita incomes, with Vietnam's soaring to US$10,400 in 2030 from about US$2,500 (S$3,421) last year, they estimate.

The South Asian members of the group should be GDP standouts as they will together account for about one-fifth of the world's population by 2030, Standard Chartered reckons. The demographic dividend will be a boon for India, while Bangladesh's investments in education and health should juice productivity.

The Asian dominance of the list is a change from 2010, when the bank first started tracking the economies it expected to grow by around 7 per cent. Back then, there were 10 members evenly split between Asia and Africa: China, India, Indonesia, Bangladesh, Vietnam, Nigeria, Ethiopia, Tanzania, Uganda and Mozambique. China is a notable absence from the latest ranking after being a member of the club for almost four decades - reflecting both a slowdown in economic growth and a progression towards higher per capita incomes.

Standard Chartered estimates the world's No. 2 economy will keep up a 5.5 per cent economic growth pace in the 2020s. Sub-Saharan African countries also have faded, which the analysts attribute to "waning reform momentum, despite a slowdown in commodity prices".

While faster growth is not a panacea - think income inequality and pollution - it tends to come with a lot of positive knock-on effects, the writers note. "Faster growth not only helps to lift people more quickly out of absolute poverty, but is also usually accompanied by better health and education, as well as a wider range of - and better access to - goods and services.

"Higher incomes resulting from faster growth also usually reduce socio-political instability and make it easier to introduce structural reforms, creating a virtuous cycle."

In addition, members of the "7 per cent growth" club tend to have savings and investment rates of at least 20 to 25 per cent of GDP, according to the report.

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A version of this article appeared in the print edition of The Straits Times on May 14, 2019, with the headline 'Asia set to dominate '7% growth' club during 2020s'. Print Edition | Subscribe