1. Asia’s dependence on capital from the West to finance growth is a myth, says DBS Research

Asia’s dependence on capital from the West to finance growth is a myth, says DBS Research

Global economy is filled with enduring myths with one of them being Asia still relies on capital from the west to fund its growth, DBS Group Research said today.

By: | Updated: August 24, 2017 6:30 PM
Equity investors, investment in bonds, RBI, rbi rate cut impact on equity investors, rbi rate impact on equity market  DBS Group Research debunks the idea that Asia can’t fiance it’s own growth. (Image: Reuters)

Global economy is filled with enduring myths with one of them being Asia still relies on capital from the west to fund its growth, DBS Group Research said today.

 The research debunks the idea that Asia can’t fiance it’s own growth. It says that while Asia requires massive amounts of investment to keep up with the improving living standards, living standards, it has the necessary resources to fund the growth.  Getting into the numbers, it says, every year, the Asia-10 invests 6% of its GDP in US Treasuries or real estate or stocks and bonds of corporations somewhere outside of Asia. It’s been doing this for the past 19 years. That’s a huge amount of money that it could be investing at home – that it should be investing at home. DBS Group says that Asia, seen in it’s entirety,  is running current account surpluses – exporting more than importing.

The report goes on to say that Asia has been running these surpluses for almost 20 years.  Hence,  Asia has the resources to finance itself and more. According to DBS, Asia must start investing at home, where it’s needed, instead of abroad, where returns are shamefully low. The research points out that, contrary to popular belief, Asia funds 100% of its growth and then sends 6% of its income abroad every year to fund the growth of others.  

Speaking about Asian currencies the report says that Asia’s currencies are remarkably stable. It’s the dollar-euro and dollar-yen exchange rates, that are volatile, says the report. When the dollar bounces up and down against the euro or the yen, most Asian currencies they swim down the middle, the report says.

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