APAC (Japan, China, India, Indonesia, Malaysia, Australia, Rest of Asia-Pacific)
The Asia Pacific region is home to population of over 4.5 billion people making it the fastest growing economic region in the world. This diverse region comprises 11 countries, including powerhouses like China, Japan, India and Australia among others. Over the years the Asia Pacific region has witnessed economic growth rebounding strongly at 6.5% in 2021. However due to global environment uncertainties, growth was projected to moderate to around 4.0 percent in 2022 but is expected to rise again to about 4.3 percent in 2023. Leading the charge in this growth trajectory are economies such as China (the world’s second largest economy) followed closely by India and Japan. Additionally emerging economies like Vietnam, Indonesia and the Philippines are poised for expansion, in the coming years.
Japan holds the position of being the third-largest economy globally boasting a GDP of around USD 5 trillion. The nation has workforce renowned for its expertise, cutting edge technology and a robust foundation in development. Following World War II Japan experienced economic expansion due to strategic government measures that prioritized export driven industrialization, infrastructure investments and fruitful collaboration, between the public and private sectors.
Government Policies and Reforms
- Abenomics, a set of economic policies led by Prime Minister Shinzo Abe with the goal of rejuvenating Japan’s economy. These measures include actions such, as expanding the money supply increasing government expenditure and implementing reforms to enhance competitiveness in the economy.
- The Japanese government has taken steps to address labor shortages and enhance productivity by implementing labor reforms. These reforms include initiatives like ensuring pay for equal work providing more opportunities for women and foreign workers and improving the balance, between work and personal life.
- The Japanese government has introduced deregulation measures to promote entrepreneurship and innovation including easing regulations for startups and encouraging the adoption of renewable energy sources.
Technology and Innovation
- Japan has a strong tradition of technological innovation particularly in the fields of robotics, electronics and automotive engineering. Notably Japan has been a leader in industrial robot technology. Currently there are developments, on the horizon as Japan looks to integrate this expertise with an open source deep learning framework that originated within the country itself.
- The government has made investments in research and development focusing specifically on environmental technology and energy efficiency. For instance, Japan's approach to energy policy is based on the principles of ensuring energy security, economic efficiency, environmental sustainability and safety.
- The private sector is also actively contributing to innovation with companies such, as Sony, Toyota and Hitachi taking the lead in developing cutting edge technologies and innovative products.
International Trade and Investment
- Japan relies heavily on exports with key industries such, as automobiles, electronics and machinery. Over 50% of Japan’s export portfolio comprises machinery and equipment, electronics and vehicles. The government has implemented policies to encourage exports and attract foreign investments.
- Japan has entered into free trade agreements with various nations, such as the Trans Pacific Partnership (TPP) and the Economic Partnership Agreement between Japan and the European Union. These agreements have led to a decrease in tariffs and an expansion of market opportunities for Japanese exports.
- Japan has actively encouraged foreign investment as a means to stimulate its economy particularly in sectors like renewable energy and healthcare. The government has put in place policies that facilitate investment by companies in Japan. In May 2018, the governments Council for Promotion of Foreign Direct Investment in Japan along with the secretariats of METI and JETRO held a meeting. Decided to implement a support program for attracting overseas companies to various regions across Japan. The aim is to foster interest, from international businesses in investing outside major urban areas.
China has emerged as one of the world’s growing economies experiencing an average annual real gross domestic product (GDP) growth rate of 9.5% until 2018. This economic expansion can be attributed to factors, including government policies, the development of infrastructure foreign investments and trade as well as advancements in technology. The manufacturing and service sectors play a vital role in driving China’s economy and contribute significantly to its overall GDP. In fact, the Chinese industrial sector alone constitutes 34% of the country’s GDP as of 2022. Additionally, China holds a position globally in manufacturing producing nearly half (48%) of the world’s steel output.
Government Policies and Initiatives
- The Chinese authorities have put in place a range of measures aimed at fostering private sector investment streamlining bureaucracy and fostering innovation. Key initiatives include the decentralization of rural areas, reforming state owned enterprises (SOEs) and improving healthcare services in rural regions. These policies have played a role, in promoting the expansion of private businesses and the emergence of new industries.
- The Belt and Road Initiative is a massive infrastructure project with the goal of linking China to countries, across Asia, Europe and Africa. This initiative has opened doors for Chinese businesses to invest in infrastructure projects abroad fostering trade and economic development in the region.
- China’s "Made in China 2025" is a government program with the goal of turning China into a force in high tech manufacturing powerhouse. The plan focuses around the advancement of cutting edge technologies like robotics, artificial intelligence and new energy vehicles. This initiative has been instrumental, in fostering innovation and driving growth within the technology industry.
China’s economic growth in years has been significantly propelled by the development of infrastructure. The government of China has made investments, in various infrastructure projects, including highways, railways, airports and ports. These developments aim to enhance transportation and logistics.
- China boasts the extensive high speed rail network globally stretching, over 23,000 miles and linking significant cities and regions.
- The nation has also made investments in the construction of new airports and the enlargement of those that already exist with a goal of constructing more than 200 new airports by the year 2035.
Foreign Investment and Trade
- China has been a top destination for foreign investment in recent years, with FDI inflow reaching into China actually increased by 5.74% in 2020, to USD 149.34 billion, up from USD 141.22 billion in 2019. The government has implemented policies to attract foreign investment, including tax incentives and streamlined regulations.
- China holds the title of being the largest global exporter and the second largest importer of goods. The nation maintains an open stance, towards foreign trade accounting for 36% of its GDP in 2022 as reported by the World Bank in 2023. However, China has been diligently striving to increase its import activities and diminish trade obstacles in an effort to foster equitable and balanced trade partnerships.
Technology and Innovation
- China’s digital revolution has played a vital role in boosting the economy and fostering innovation. The 14th Five Year Plan of China (2021-2025) outlined the goal of having the core sectors of the economy contribute 10% to the country’s GDP by 2025 up from 7.8% in 2020. This initiative aims to drive the growth of cutting edge technologies like intelligence, big data and cloud computing. Renowned Chinese technology giants such as Alibaba, Tencent and Huawei have been instrumental, in driving these advancements and expanding their influence globally.
- The Chinese authorities have also been actively promoting innovation and the spirit of entrepreneurship by implementing policies and providing funding programs. Moreover, China has emerged as a leading player in the global e-commerce landscape with market dominance by companies like Alibaba and JD.com. The rise of mobile payment platforms, like WeChat Pay and Alipay has further fueled the expansion of the economy.
India with its population exceeding 1.4 billion people and a GDP surpassing USD 2.1 trillion is among the expanding economies globally. The nation has witnessed economic progress in recent times fueled by various factors including demographic advantage, governmental initiatives, foreign investments and the emergence of new sectors.
- Make in India, which was initiated on September 25, 2014 aims to promote innovation improve skill development, safeguard intellectual property rights establish state of the art manufacturing infrastructure within the country and encourage investment in India.
- The Digital India campaign has the objective of turning India into a society empowered by technology and a knowledge based economy. Its efforts encompass enhancing internet connectivity fostering literacy and leveraging technology across sectors, like healthcare and education.
- Skill India, introduced in 2015 is a program designed to offer training and develop skills among the young population of country. The primary objective of this initiative is to create a workforce capable of fulfilling the diverse requirements of different industries while playing a significant role in the overall economic progress of our nation.
- India has emerged as one of the rapidly expanding IT markets globally. Over the few decades India’s IT sector has played a crucial role in driving its financial power. With a workforce of than 5.2 million professionals, India’s business process management (BPM) industry has contributed, around 7.4 percent to the country’s GDP as of 2022.
- Agriculture is a backbone of the Indian economy providing employment to more than 50% of the workforce. It contributes 16% to the country’s GDP. India stands as the largest global producer of wheat, rice and various other agricultural goods. With the governments attention on enhancing productivity and embracing advanced technologies this sector holds great potential, for fueling economic growth in the future.
- India stands as one of the markets for renewable energy globally aiming to reach a capacity of 175 GW by 2022. The country has made advancements in this field with solar and wind energy playing a pivotal role in its overall renewable energy capacity. The governments dedicated efforts to reduce carbon emissions and increase the proportion of energy sources, in the energy mix are projected to spur growth within the sector.
- Foreign investment in India has seen an increase in the past few years. The World Investment Report 2020 by UNCTAD reveals that India ranked among the 10 countries worldwide in terms of receiving foreign investment in 2019. During the year 2022-2023 the total inflow of foreign direct investment (FDI) reached USD 70.97 billion with FDI equity inflows reaching USD 46.03 billion.
Indonesia holds the position of being the largest economy in Southeast Asia and is also renowned for being the fourth most populous country globally. In years Indonesia has witnessed steady economic progress with a remarkable average annual growth rate of 5.30% in 2022 indicating a 1.60% rise compared to the previous year. This upward trajectory can be attributed to factors such as advancements, in infrastructure favorable investment conditions and the development of human resources.
- Indonesia has made strides in enhancing its infrastructure over the past decade which has played a pivotal role in driving economic growth. The government has allocated funds to construct new roads, railways, airports and ports with the aim of improving connectivity and lowering transportation expenses. As of 2023 it is estimated that 390 trillion Indonesian rupiah have been dedicated to infrastructure development.
- For instance, the Trans Java toll road project has greatly enhanced accessibility to cities and ports on Java Island, which happens to be the most densely populated island in the country. Similarly through its sea toll program the government has facilitated the establishment of ports and shipping routes that have bolstered trade and commerce.
- Additionally, there have been investments by the government in power plants and renewable energy sources to address Indonesia’s energy requirements. The ambitious 35,000 MW electricity program aims to augment the country’s power capacity while simultaneously reducing reliance on fuels.
- Indonesia’s investment climate has been steadily getting better owing to the government’s efforts in implementing policies to attract investors. In 2022, Indonesia saw an increase of 45% in foreign direct investments amounting to IDR 656 trillion. Most of these investments were directed towards the base metal and mining sectors. The government has also taken steps to simplify procedures and reduce bureaucratic red tape making it more convenient for businesses to operate.
- Indonesia provides a range of investment opportunities across different sectors such as manufacturing, infrastructure and tourism. With its continuously growing consumer market as well as abundant natural resources the country stands out as an appealing destination for foreign investors.
- Indonesia has made advancements in enhancing its business environment as evidenced by its improved ranking of 73rd out of 190 countries in the World Banks 2020 report. The government has taken steps to streamline business registration processes decrease the time and expenses involved in obtaining permits and facilitate access, to credit opportunities.
Human Capital Development
- Indonesia recognizes the significance of investing in education to enhance its workforce’s quality. The government has allocated funds towards education and implemented reforms to elevate the standards of teachers and curriculum. With a projected workforce of 66m adults by 2035 Indonesia is prioritizing education to ensure its citizens are well prepared for an increasingly competitive economy.
- Indonesia is also actively promoting the development of skills through programs like TVET (Technical and Vocational Education and Training). These initiatives offer training across various industries. In the year 2021 2022 approximately 5.6 million students were enrolled in vocational schools across Indonesia. These schools provide three year courses focusing on technology and engineering, healthcare, arts and crafts tourism, ICT, agro business and agro technology well, as business management.
Industry-Specific Growth Drivers
- The manufacturing sector in Indonesia has experienced rapid growth owing to government incentives and a sizable young workforce. Important industries within the country include textiles, automotive and electronics.
- In recent years, Indonesia’s tourism industry has witnessed substantial expansion, driven by the nation’s breathtaking natural landscapes and rich cultural attractions. In 2021, the tourism sector in Indonesia generated approximately 549 million US dollars. To support this growth the government has made investments in infrastructure development and marketing efforts.
- Agriculture holds high importance in Indonesia as it employs a large portion of the population while contributing to food security, within the country. Over 43% of Indonesians reside in rural areas with nearly 29% of the workforce engaged in agricultural activities. Primary agricultural production accounted for 13.7% of GDP in 2020 with key crops being palm oil, rubber and coffee.
Malaysia has been witnessing economic growth in Southeast Asia with its trade to GDP ratio consistently averaging over 130% since 2010. This remarkable progress can be attributed to factors such, as government policies and initiatives infrastructure investments and a flourishing tourism sector. The country has experienced economic expansion over the past few decades owing to these contributing factors.
Government Policies and Initiatives
- Launched in 2010 the Economic Transformation Program (ETP) was dedicated to the goal of turning Malaysia into a high income nation in the year 2020. This comprehensive plan centers around 12 National Key Economic Areas (NKEAs) which encompass sectors like oil and gas palm oil production, tourism and education. By focusing on these areas the ETP has successfully attracted significant foreign investments and played a vital role in driving economic growth throughout Malaysia. The programs main objectives revolve around enhancing industries such as manufacturing, services and agriculture while also prioritizing infrastructural developments and fostering an appealing environment for foreign investors.
- The Malaysian government introduced the New Economic Model (NEM) in 2010 with the aim of transforming the country’s economy and tackling income inequality. This plan emphasizes the importance of focusing on high value activities and innovation while also prioritizing the development of capital and promoting sustainable growth. Additionally, the NEM seeks to decrease reliance, on skilled foreign labor and enhance productivity levels.
Investment in Infrastructure
- Malaysia has made investments in infrastructure to support its economic growth and development. The government has allocated funds towards the construction of new highways, railways, ports and airports. These infrastructure projects aim to enhance connectivity and facilitate the transportation of goods and people throughout the country.
- One major infrastructure project is the East Coast Rail Link (ECRL) which will connect the east coast of Peninsular Malaysia with the west coast. This project is expected to stimulate economic growth in the region and promote increased trade and tourism.
- Another significant initiative is the Pan Borneo Highway, which aims to improve connectivity between Sabah and Sarawak in East Malaysia. It is anticipated that this project will contribute to economic growth and development in the region.
Digital infrastructure improvements have also been prioritized by launching initiatives such, as the National Fiberisation and Connectivity Plan (NFCP) and the 5G Malaysia Plan.
- Tourism plays a vital role in boosting the Malaysian economy contributing around 15% to the country’s GDP. Over the years there has been growth in this industry witnessing a rise in tourist numbers visiting Malaysia annually. In 2022, approximately 9-10 million tourists came to explore the beauty of Malaysia.
- The government has taken initiatives and implemented policies to promote tourism. Notable among them are the Malaysia Tourism Transformation Plan and the Visit Malaysia Year campaign. The Malaysia Tourism Transformation Plan aims to attract 36 million tourists and generate RM168 billion in tourist receipts by 2025. Additionally investments have been made in enhancing infrastructure, including the construction of airports, highways and public transportation systems. These developments have made traveling within the country convenient, for tourists.
- Malaysia offers a range of natural and cultural attractions, such as stunning beaches, lush rainforests, significant historical sites and bustling cities. Additionally, the growing middle class in neighboring countries like China and India has led to an increased interest in travel, for leisure and tourism purposes.
- The manufacturing industry has played a key role in driving Malaysia’s economic growth making a significant contribution of around 40% to the country’s GDP. This sector encompasses a range of industries such as electronics, automotive and food processing. The government has implemented policies and initiatives aimed at attracting foreign investments and fostering local entrepreneurship within the manufacturing industry.
- Malaysia boasts a workforce and offers a favorable business environment making it an appealing choice for manufacturers.
- The government has made investments in infrastructure development particularly in transportation and communication networks to support the expansion of the manufacturing sector. With its location and access to key markets in Asia Malaysia serves as an ideal hub for both manufacturing and distribution purposes.
Australia is a highly developed nation with a mixed market economy that thrives on its abundant natural resources, a highly educated workforce and modern infrastructure. For more than two decades the country has consistently achieved economic growth positioning it among the most prosperous countries globally. From 1960 to 2022 Australia’s GDP averaged around 503 billion USD, reached its peak at 1676 billion USD in 2022. The Australian economy derives its momentum from factors such as government policies, industry and business expansion international trade and investments as well, as infrastructure advancements. These elements have significantly contributed to the country’s economic performance and impressive GDP figures.
Government Policies and Initiatives
- The Australian government plays a key role in stimulating economic growth and boosting the country’s GDP through its fiscal policies, which involve taxation and spending. To drive the economy the government has implemented measures like tax cuts for individuals and businesses increased investment in infrastructure and support for medium sized enterprises. Additionally, they are providing income tax cuts to assist more than 10 million low and middle income earners.
- The Reserve Bank of Australia also contributes to growth and GDP through its monetary policies. These policies include managing interest rates and controlling the money supply. The bank has taken steps such as lowering interest rates to encourage borrowing and spending well as increasing the money supply to enhance liquidity in the economy.
- Australia experiences economic growth due to domestic consumption being one of its primary drivers. The country boasts a consumer base that consistently fuels demand across various industries for goods and services. As a result there is increased investment in sectors like infrastructure, technology among others, which further propels expansion.
- A stable political environment is another factor that drives economic growth in Australia. The country benefits from an established legal system along with a strong commitment, to upholding the rule of law. This favorable environment fosters business friendly conditions attract investors.
- The mining sector plays a vital role in boosting Australia’s economy making up nearly 9% of the GDP. Iron ore, coal and gold mining dominate this industry serving as exports for the country. However, the sector has encountered obstacles in times due to fluctuating commodity prices and growing concerns regarding environmental impact.
- Australia’s agriculture industry is also a contributor to the economy accounting for approximately 3% of the GDP. The country stands as an exporter of agricultural goods such as wheat, beef and wool. Unfortunately this industry has faced challenges in years due to droughts and other climate related issues.
- Australia’s manufacturing industry holds importance in its economic landscape by contributing around 7% to the GDP. This diverse sector encompasses food and beverage production, machinery and equipment manufacturing well as chemical production. Nevertheless, it has faced hurdles recently due to competition from countries, with lower production costs and the strength of the Australian dollar.
- International trade plays a significant role in boosting Australia’s economy. The country’s economy is highly developed and diversified making it an attractive trading partner for nations worldwide. In 2020, Australia exported services USD 47 billion while the total value of Australian imports increased by 6.5 percent to reach USD 420 billion in 2018 19.
- Australia maintains trade relationships with key partners such as China, Japan, the United States, South Korea and New Zealand. These countries contribute significantly to Australia’s trade activities. Notably China stands as Australia’s trading partner with bilateral trade, between the two nations amounting to AUD 250 billion in the fiscal year of 2019 20.
- Regarding exports Australia primarily focuses on minerals, fuels and agricultural products. The country holds the distinction of being the world’s leading exporter of iron ore, coal and liquefied natural gas (LNG). Other notable exports include gold, copper and wheat. On the other hand, Australia's major imports include machinery, vehicles, and refined petroleum.
Rest of Asia-Pacific
The Asia Pacific region is home to several of the world’s expanding economies. Other nations, like Bangladesh, Bhutan, New Zealand, the Philippines, Singapore, South Korea, Thailand and others have witnessed economic progress in recent times. In the following discussion we will delve into the factors that propel growth in these countries and shed light on noteworthy trends and advancements.
- Bangladesh has seen economic progress in the past few years recording an impressive GDP growth rate of 8.16% in 2019. The factors contributing to this growth include an increasing workforce, a swiftly expanding manufacturing industry and a government emphasis on improving infrastructure and attracting foreign investments. Furthermore the country’s advantageous geographical position between India and China has enabled it to become a trading and business hub, in the region.
- Bhutan has successfully utilized its hydropower resources to export electricity to India making it a significant driver of the country’s economic development. Over 72% of the generated power is supplied to India.
- Bhutan is renowned for its culture and breathtaking natural landscapes, which have been attracting an increasing number of tourists in recent times. The government has implemented measures to encourage tourism while safeguarding the nation’s rich cultural heritage.
- Tourism plays a major role in bolstering New Zealand’s economy as evidenced by the expenditure of about NZD 16.2 billion from international visitors in 2019. The country’s exceptional natural landscapes thrilling adventure tourism offerings and rich cultural encounters have established it as a choice, for globetrotters hailing from various corners of the globe.
- Agriculture plays a key role, in New Zealand’s economy as the country is a major exporter of dairy products, meat and wool. This sector contributes around 5% to the country’s GDP. Provides employment to approximately 5% of the workforce.
- Remittances sent by Filipinos working abroad have played a role in driving the country’s economic expansion. Despite the challenges posed by the COVID 19 remittances soared to an all-time high of $33.19 billion in 2020 constituting approximately 9.8% of the nation’s GDP.
- The Business Process Outsourcing (BPO) sector has emerged as a pillar of the Philippine economy creating employment opportunities and generating substantial revenue. Over the years this industry has experienced growth with revenue amounting to $26.3 billion and employing more, than 1.2 million Filipino individuals in 2019.
- Singapore is a developed economy that has enjoyed steady growth over the past few decades. The country’s prosperity can be attributed to factors, such as its advantageous geographical location, strong trade ties and business friendly policies. As per the Q2 2023 GDP statistics released by Singapore’s Ministry of Trade and Industry (MTI) Singapore’s GDP growth rate showed improvement at 0.5% year on year (y/y) surpassing the 0.4% y/y pace in Q1 2023.
- Situated at the intersection of shipping routes, Singapore has become a central hub for global trade. With one of the ports worldwide and a prominent airport serving both passengers and cargo it plays a crucial role in international transportation.
- Singapore has fostered trade relationships with nations across the globe. It actively participates in free trade agreements like the ASEAN Free Trade Area and the Trans Pacific Partnership granting it wider access to foreign markets while attracting investments from abroad.
- Singapore has gained a reputation as an attractive destination, for enterprises due to its business environment featuring low taxes and minimal bureaucracy. The government has implemented policies aimed at promoting entrepreneurship and innovation investing significantly in research and development. This has significantly contributed to the development of a thriving startup community and has enticed multinational companies to establish their presence within the nation.
- South Korea’s economy thrives on its advancements and commitment to innovation. The nation boasts globally recognized technology giants like Samsung and LG supported by a skilled workforce.
- South Korea boasts an export oriented economy with exports contributing significantly to its GDP. The country is renowned for its automobile, electronics and steel exports among products.
- In recent years South Korea’s tourism industry has experienced rapid growth fueled by the global popularity of K Pop music and Korean dramas. To further enhance this sector the country has been making investments in tourism infrastructure such as new hotels, resorts and exciting attractions, throughout the nation.
- Thailand’s economy has experienced growth with its tourism industry playing a crucial role by contributing around 20% to the country’s GDP. The nation is renowned for its captivating beaches, temples and vibrant cultural heritage attracting millions of visitors annually.
- Thailand boasts a manufacturing sector that excels in areas such as electronics, automotive production and food processing. Thanks to its location and skilled workforce the country has successfully attracted substantial foreign investment.
- Agriculture has long been a pillar of Thailand’s economy particularly in the cultivation of rice—a staple food within the nation. To support this sector the government has implemented policies including farmer subsidies and investments, in agricultural infrastructure.
Research Nester offers reports that delve into the markets of various countries in the Asia Pacific region. These reports enable businesses to evaluate opportunities comprehend their competitors and gain valuable insights, about their customer base. Additionally Research Nester provides analyses that assist businesses in identifying their strengths, weaknesses and potential avenues for expansion.