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Asia-Pacific to become wealthiest region
June 16, 2015, 4:40 am

Most Asian countries - largely led by China and India - have seen significant economic growth in the past decade, propelling thousands into greater wealth [Xinhua]

Most Asian countries – largely led by China and India – have seen significant economic growth in the past decade, propelling thousands into greater wealth [Xinhua]

If you’re heading to Europe to see how the world’s largest number of rich and famous are tripping the light fantastic, then think again.

According to the Boston Consulting Group (BCG), which publishes an annual report on the state of global wealth, you would likely find more millionaires and billionaires in China, India and the rest of Asia than in Europe.

Published on Monday, the report titled Winning the Growth Game: Global Wealth 2015 said that the Asia-Pacific region (without Japan factored in) surpassed Europe to become the world’s second-wealthiest area with $47 trillion in private wealth.

North America came in first with $51 trillion in private wealth.

But here’s the kicker, Asia-Pacific is expected to beat North America in a matter of a few years.

“With a projected $57 trillion in 2016, Asia-Pacific (excluding Japan) is expected to surpass North America (a projected $56 trillion) as the wealthiest region in the world, and will thus be the largest pool for client acquisition,” BCG said.

It also said that more than a third of the world’s combined wealth will be found in the Asia-Pacific region.

Roar the robust economies

Although there have been a few stumbles and hiccups in the past quarter of a century, the Asia-Pacific region was predicted by many analysts as the hotbed of economic growth and prosperity.

By the mid-1990s, the world’s economic focal point had already started shifting.

Terms and phrases such as Asian Tiger, Asian Powerhouse or Asian Dragons signaled that global industrialists were starting to see the waning of the Atlantic as a lucrative investment region while markets began to emerge in the Pacific.

The shift would last well into the new century and beyond.

In 2001, Goldman Sachs Asset Management Chairman Jim O’Neill realised that the emerging markets around the world were beginning to pull focus and energy from the dominant G7 countries.

In his 2001 paper, Building Better Global Economic BRICs, which focused on this trend, O’Neill coined the acronym used in the title to shed light on the growing economic might of Brazil, Russia, India and China as emerging markets.

Given their growth and market purchasing power, O’Neill was able to project that within a decade, their combined GDP would “raise important issues about the global economic impact of fiscal and monetary policy in the BRICs”.

As such, BRICs would become the stalwart players in a global economy, O’Neill forecast, adding that the four countries would be among the world’s most powerful economies.

“World [policy-making] forums should be re-organised and in particular, the G7 should be adjusted to incorporate BRIC representatives,” he advised.

Go east, my man

Growth in at least two of the aforementioned countries – specifically China and India – has continued with significant stability.

Although it is no longer in two-digit zones, China’s GDP growth was 7.7 per cent in 2012 and 2013, 7.4 per cent in 2014. The World Bank forecasts that its economic growth in 2015 will be 7.1 per cent; 7.0 per cent in 2016.

In the same period, India’s GDP growth has steadily increased from 5.9 per cent in 2012 to 7.5 forecast in 2015 and 7.9 in 2016.

These numbers seem like decent indicators of economic growth and expansion. However, when compared with Eurozone and North American figures and projections, the difference is stark.

In 2012, the Eurozone and US growth rates were -0.7 and 2.3 per cent, respectively. Forecasting for 2016, growth is expected to be 1.8 and 2.8 per cent, respectively.

Global economic growth for 2016 is supposed to be 3.3 to 3.9 per cent, the World Bank says. Overall BRICS GDP growth, boosted by India and China, will be 5.6 per cent in 2016.

The BCG report said: “Private wealth in China and India also showed solid market gains, driven mainly by investments in local equities. China’s equity market rose by 38 per cent and India’s by 23 per cent.”

Not surprising, the growing prosperity in Asia-Pacific has contributed to a new trend in international tourism.

While the overall growth in global journalism hit 5 per cent in the first six to nine months of 2014, regional growth revealed just how powerful rising economies like China had become in the tourism industry.

According to the United Nations World Tourism Organization (UNWTO), growth in China as a source of tourists grew 16 per cent, with France and Italy growing at 10 and 8 per cent respectively in 2013.

Ninety-seven million Chinese traveled abroad in 2013, rising from 14 million in 2012, according to China’s National Tourism Administration in January. The figure is expected to rise over 100 million this year.

Among the top 25 source markets in expenditure, India registered +31 per cent, Taiwan (pr. of China) saw +11 per cent and the Republic of Korea +10 per cent, the UNWTO report said.

The BRICS Post with inputs from Agencies