2017 growth may be better than expected with Asia to lead the way: Deloitte report

THE year 2017 may be better than expected despite protectionist rhetoric from the US and nervousness in the financial markets, according to Deloitte.

In its first edition of the Voice of Asia series of reports that was released on Friday, Deloitte points out that a stabilising world economy, the picking up of trade, and a consumer boom in Asia are three factors which suggest that global growth may surprise on the upside this year.

Deloitte's report suggests that the global economy is normalising, following a series of shocks that began with the global financial crisis and then led to the eurozone debt crisis and geopolitical shocks in the Middle East, Europe and Asia.

In fact, Deloitte predicts that global growth could in fact accelerate in 2017, with leading indicators pointing to a lift in world trade. This will be led by Asia with strong growth in China, India and Asean, with the help of a more buoyant US economy and stabilisation in other G-7 economies.

The report also noted that China and India are increasingly being powered by consumer booms, providing Asia with an additional line of defence if global growth is not as good as expected and trade tensions boil over.

But significant risks still need to be managed, including continuing stresses in global financial markets, whether the anticipated depreciation of the Chinese yuan can be achieved in an orderly fashion, and the threat of resurgent protectionism.

However, Deloitte says that South-east Asia economies are better placed to limit the impact from any adverse developments.

Manu Bhaskaran, director of Centennial Group and Deloitte Alliance Partner, commented: "As we head into 2017, there is much concern about the many uncertainties that cloud the outlook for Asian economies. While it is true that there is much that can go wrong, we also believe that pessimism is misplaced. Despite some headwinds, Asian economies are likely to perform better this year than last. Stresses and setbacks are possible but our view is that Asian economies are today more resilient to these."

Centennial Asia Advisors supported Deloitte in producing the Voice of Asia report.