The world economy is stuttering to recover across the west, but Asia is booming and keeping global growth going.
China is the engine, but South East Asian nations are also flourishing, and even places like Thailand, fresh from a political crisis, are growing in double-digit figures.
Companies are coming from the world’s big economies to tap new markets and investors are pouring money in to a place where they will get good returns.
Thailand has a mixed image, from the modern skyscrapers towering above the chaos of backstreet Bangkok, to the beaches, islands and seedy bars where tourists flock, to the rural rice paddies in its agricultural heartland.
But what is Thailand’s main money maker? Tourism doesn’t even come close and neither does rice.
Its biggest export is computer hard disk drives – manufacturing is the industry which is driving this growth.
At the massive Eastern Seaboard Industrial Estate two hours from Bangkok and just 30 minutes from the beach resort town of Pattaya, Ford is building a gigantic new factory.
Demand is outstripping what the company can supply from its current car plant shared with Mazda. So the company is investing $800m (£505m) in Thailand this year to produce vehicles for the Asian market, creating tens of thousands of jobs.
“Every company that wants to have a global footprint has to have a good plan for Asia,” says Peter Fleet, President of Ford in the Association of South East Asian Nations (ASEAN).
“We believe Asian growth will account for about 70% of our company’s growth over the next eight years, so we are applying a lot of our resources to China, to India and South East Asia to make sure we can capitalise on that terrific growth opportunity.”
The market is expanding with more people in Asian countries consuming more, higher value, products and it comes just a decade after a major shock to the region.
The Asian financial crisis of the late 1990s began in Thailand with the collapse of its currency, the baht, but lessons were learned from mistakes made, and it has helped countries in this part of the world bounce back quicker.
“We are obviously doing very well in terms of the rapid rate of recovery from the global financial crisis that every country around the world faced,” says Korn Chatikavanij, Thailand’s finance minister.
“We have seen double-digit rate of GDP growth in many countries across Asia – Thailand included – and this frankly in spite of the political mess that we’ve had.
“So in short, things are looking stable, growth is good and unemployment is down. We have no other reason than to feel quite positive about how things have taken place.”
He predicts Thailand’s annual growth will end the year at 7.5%, despite a political crisis which left 91 people dead and saw landmark buildings in Bangkok set on fire as the military used live rounds to break up a two-month long blockade of the city centre by anti-government protesters.
Asia is producing for its own expanding markets, but they are still relatively small in the global context, and it is exports to the west which bring in higher levels of growth.
The bigger western economies are still in a slump following the financial crisis, but unless they can start buying more goods from Asia again, these emerging nations will not be able to keep growing, or keep propping up the world economy.
It does make a big impact now, as things would be a lot harder if Asia was not doing as well.
As one of the few places in the world to get good, fast returns, investors are pouring money in, strengthening the currency
With the baht at its highest level against the dollar in 17 years, there is strong money around to spend, and so Thais are on a spending spree in Europe.
In the UK, Leicester City Football Club, the Corus steel plant on Teesside in the north-east of England, and fish canning brand John West are all being bought by Thai investors.
British businesses want to be a part of it too. Tesco continues to expand in Thailand, as does Boots, which is adding 25 to 30 new stores to the 176 it already has across the country.
“Relative growth in Europe is fairly small but the growth in India, China and Asia overall is exponential,” says Paul Millar, managing director of Boots Retail Thailand.
“It is relatively untapped so therefore the opportunities are very good for a western company coming in. Asia is booming and we see long term-growth in Asia.”
Many agree and so the money keeps flowing and the economies strengthening.
Asia may still not be strong or big enough to save the world economy, but it is supporting it at a crucial time while simultaneously spring-boarding its own development.
source – www.bbc.co.uk