The great economic slowdown will continue. The official growth rates will be around 6.5%, while true growth rates will be much lower (most economic forecasts coming in around 5.8%).
The corruption crack down will continue after discovering that the local governments had been inflating growth rates in the past. This crack down will diminish area budgets, pushing spending and consumption even down further.
It is expected that China will see more monetary easing and fiscal easing, but these stimulus programs are unlikely to boost growth significantly.
The key to a successful 2016 for China will be to drive consumption and develop the service sector.
India is expected to be the star performer in 2016, with growth forecasts coming in around 7.5%. India is a net oil importer and, if it will take advantage of the low oil prices, the government will make an easy transition from spending on expensive fuel subsidies to spending more in 2016 on welfare programs, with hopes that a major consumption boost will drive growth in India. Another way to boost consumption is by raising wages for civil servants in India’s middle class.
Growth will be slow, but stable in 2016. A weaker yen will make exports more competitive, and as the U.S. Fed continues to raise interest rates, the yen should continue to weaken. Demand for Japanese goods will rise in the U.S. and in other markets across the globe.
The outlook continues to be mostly positive , with GDP growth expected to accelerate to 3% amid improving domestic consumption. Nonetheless, 2016 presents some challenges for South Korea, mainly in the form of threats to export competition: the inflation in the neighboring countries, the exposure to the large importer China, the U.S. Fed raising interest rates.
Malaysia and Indonesia are in risk of continued currency weakness and capital outflows, as the U.S. Fed continues to elevate interest rates. South East Asia could gain from China’s slowdown, as more factories will move from China to Cambodia, Vietnam, and Myanmar. The frontier markets are expected to grow to 6-7%, with its cheap labor force.
Things are looking a little bleaker for Australia in 2016, with slow growth predicted and jobs being reduced. To boost a creative and innovative economy, a 1 billion Australian dollar fund has been recently established.