Sri Lanka is ranked among Asia Pacific’s top 10 foreign direct investment (FDI) hotspots, according to a study by US-based global information company IHS Inc.
The other Asia Pacific FDI hotspots are China, Indonesia, Malaysia, Vietnam, the Philippines, Myanmar, Thailand, India, Sri Lanka and Bangladesh.
In a statement today, IHS said that over the next decade, the Asia Pacific is forecast to be the fastest growing region of the global economy and the region that offers the biggest potential gains for FDI.
Amongst the other South Asian economies, Sri Lanka and Bangladesh are expected to show rapid growth over the next decade.
The new Sri Lankan government has embarked on sweeping economic reforms, with its first budget containing considerable economic liberalization measures. The Sri Lankan economy is projected to grow at an average annual pace of 5.6 percent per year over 2016-2020. Key growth industries are expected to include logistics, tourism, agricultural products, IT-BPO industries and construction.
“The Asia Pacific region will grow at an average annual rate of 4.5 per cent per year, boosted by rapid growth in consumer spending in China, India and Southeast Asia,” said IHS Chief Economist Asia Pacific Rajiv Biswas.
Malaysia, Indonesia, the Philippines and Thailand are also expected to join the ranks of Asian nations with a Gross Domestic Product exceeding US$1 trillion by 2030.
“This will help to increase the geopolitical and economic importance of ASEAN and economic grouping in international diplomacy and the global dialogue on trade, investment and international standards-setting,” said.
IHS said that Southeast Asia is expected to be one of the world’s fastest growing regions with these four Asean nations.
Referring to Malaysia as Asia’s next advanced economy, the IHS report said that Malaysia’s economy is forecast to achieve a per capita GDP of US$20,000 by 2025, with total GDP exceeding US$1 trillion by 2030.
Biswas pointed out that the structure of the Malaysian economy will continue to shift towards higher value-added manufacturing and services.
“Strategic growth industries in the services sector will include financial services, healthcare, education, commercial aviation, tourism and the IT-Business Process Outsourcing industry, as Malaysia becomes an increasingly important services, services-exporting economy for Southeast Asia,” said Biswas.
Indonesia’s GDP is forecast to grow at five per cent per year over 2016-2020, supported by strong growth in consumer demand and infrastructure investment, he added.
“By 2020, Indonesia will have already become a nation with a GDP size exceeding US$1 trillion, and by 2030, Indonesian GDP is projected to exceed US$3.7 trillion,” said Biswas, adding that Indonesia is Southeast Asia’s largest economy and one of the world’s largest emerging markets.
The Philippines, he said, has shown rapid GDP growth averaging at around six per cent per year over 2011-2015, with GDP growth of 5.8 per cent per year forecast over 2016-2018.
“The total size of the Philippines’ economy is projected to grow from US$300 billion in 2016 to US$700 billion by 2025, and a US$1 trillion economy by 2030,” Biswas added.
Meanwhile, the ASEAN frontier markets of Vietnam, Myanmar, Cambodia and Laos are forecast to continue to grow rapidly.
The IHS study showed that Vietnam will grow at a pace of around 6.5 per cent per year over the medium term, with rapid growth in manufacturing exports of electronics and garments driving industrial development.
“The new EU-Vietnam Free Trade Agreement and the planned TPP deal will significantly boost Vietnam’s market access to the EU and the US for its manufacturing exports by reducing tariff barriers substantially,” he added.