Geopolitics the real risk for Asia in 2018: Natixis

HONG KONG – In an assessment of the year ahead, global asset manager Natixis says Asian economies will remain strong thanks to improved global demand, recovery of GDP in India and ASEAN, and solid expansion in China. Inflation is expected to accelerate, but central banks will respond only shyly to higher nominal growth rates.

Natixis believes South Korea, Malaysia, the Philippines, Thailand, and Australia will raise rates but real interest rates will remain moderate.

“In the short run, our benign scenario has two key risks: a military event linked to North Korea, and a much more hawkish FED,” Natixis says.

“In the medium run, we expect Asia’s structural growth to decelerate due to China’s decreasing potential GDP and ageng in many countries.

“Geopolitical concerns will be key. Particularly, the increasingly intrusive role of China in Asia through the Belt and Road Initiative needs to be watched.”  www.natixis.com (ATI).