Continued economic growth to benefit trade

Related tags Economics

A recent report from the Australian National University indicates
that food and beverage companies in the Asia Pacific region will
continue to benefit from strong economic growth in 2004, but that
growth is set to fall back next year.

According to the report author, Christopher Findlay, average growth of 4.7 per cent is predicted for the region, which compares to 3.6 in 2003. This figure is expected to ease back to 4.4 per cent in 2005, indicating that the rate of investment in the food and beverage industry will also start to fall back.

In the global picture, the report says that growth in the regions' economy is being driven by the continued strength of the US, Japanese and China economies, which in turn is leading to an increasing amounts of trade both on a regional and international basis.

In the Asia Pacific region growth will still be led by the China market, the report said. Last year it averaged 9 per cent, but as pressures on resources take their toll, that growth is expected to fall back to 8 per cent this year. The food and beverage industry has been one of the biggest victims of the phenomenal growth, witch many commodities such as wheat and soy increasing in price and further pricing pressures coming from a significant rise in the cost of power.

Elsewhere in the region both Thailand and Vietnam are expected to show strong growth this year, with Findlay estimating both of these economies to show economic growth in excess of 7 per cent during the course of this year. Other above average performers will include Hong Kong, Singapore and Malaysia.

The rising cost of energy has already led to problems for food and beverage in the China market, but Findlay also points out that the problem could be more widespread in the course of the year on a regional level. In Vietnam, Indonesia and the Philippines high rates of inflation are expected to in turn affect energy costs, which, as in the China market could fuel inflation further as food prices rise.

The export market in the region is also expected to provide food and beverage manufacturers with an increasing number of opportunities throughout 2004. Findlay estimates that in the course of the year export growth is expected to reach 10 per cent, a figure that he believes will begin to ease off in 2005.

Related topics Business

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