Asia is set to build on its role as the engine of global growth, as intra-regional grows, according to Deutsche Bank’s chief investment office (CIO).
This is despite the continued property and local government debt crises, uncertain employment prospects and the likelihood of an escalation in the trade conflict with the US.
Deutsche Bank CIO expects further government support measures for key technologies such as semiconductors and renewable energy and the continuing shift from a production-based economy towards greater consumer orientation.
Moreover, China has already “significantly diversified its international trade policy” in the years since Donald Trump’s first presidency, making it less vulnerable to a possible increase in US tariffs on Chinese imports, the Deutsche Bank CIO noted in its 2025 global outlook.
Exports to the US have fallen to 13% of China’s total exports from 20% in 2017. “Instead, a larger proportion of Chinese exports is going to India and Southeast Asia, further intensifying the trade links between the region’s economies.”
Indeed, the strategic integration of Southeast Asia is gathering pace, according to the CIO. “In Malaysia, Indonesia, Thailand and Vietnam the BRICS+ organisation has recently acquired no less than four new Southeast Asia partners,” it noted.
BRICS+ nations’ combined share of global commodity supply amounts to 75% of manganese, 72% of rare earths, and 50% of graphite, “which enables the region to chart an independent course with its growth plans particularly in the area of sustainable growth”.
Within Asia, the Deutsche Bank CIO believes that India is again likely to stand out in 2025 with expected GDP growth of 6.5%, topping the list of G20 countries.
“The world’s most populous nation benefits not only from its great innovative strength and a large pool of young and well-qualified workers but also from the stability of its political system,” it noted.
“In addition, the impact of potentially higher U.S. tariffs is likely to be manageable; exports to the US account for only around 2% of the country’s economic output.”
Meanwhile, Japan should also benefit from its broad-based export economy which enables it to satisfy demand from Asia’s growth economies in areas such as mechanical engineering, chemicals and technology.
