Economies like India are set to drive Asia’s next wave of growth, China’s contribution will decline: Morgan Stanley

Economies like India are set to drive Asia’s next wave of growth as China’s contribution to the region’s growth is set to decline, a Morgan Stanley report said.

The report said India, along with other emerging Southeast Asian economies such as Indonesia, the Philippines and Malaysia, will lead the next wave of growth in Asia.

It said, “In Asia’s next wave of growth, we believe it will be the economies of India, Indonesia, the Philippines and Malaysia that will help drive growth… while China’s relative contribution will decline.” “.

According to the report, these four economies are collectively expected to contribute 53 per cent of Asia’s nominal GDP growth by 2027, a significant increase from 33 per cent in pre-Covid years. The shift comes as demographic changes, policy priorities and geopolitical factors reshape the region’s economic landscape.

The report also notes that Asia’s economic size has grown significantly over the past few decades, with its USD nominal GDP rising from just US$2.1 trillion in 1980 to a projected US$34 trillion in 2024.

The report estimates this will reach US$39 trillion by 2027, making Asia the fastest growing major economic region globally. However, while the sector will maintain rapid growth rates, its pace may be slower than its historical record.

This shift in growth drivers reflects changing demographics and evolving government policies. As China’s population ages and its economy moves away from rapid growth, young, high-growth economies in Asia are playing a larger role. India, Indonesia, the Philippines and Malaysia benefit from favorable demographic trends and policies focused on economic expansion, which are attracting both domestic and international investment.

“Although total savings as a share of GDP will remain high, we are seeing a shift towards financial market instruments rather than traditional savings vehicles such as bank deposits, property or precious metals,” it said.

The report highlights the rebalancing of economic power within Asia, with India and Southeast Asian countries emerging as key growth drivers as China’s influence wanes.

This transformation is driven by demographic factors, policy changes and emerging financial trends, positioning Asia’s dynamic economies for a strong future on the global stage.