Hong Kong, December 13th, 2019

Natixis Asia 2020 Outlook: Growth Still Slowing

Natixis Global Markets Research today released its “Asia Outlook 2020: Growth Still Slowing,
and thus, Tougher for more Leveraged Sectors”. The report provides an in-depth analysis of the
macroeconomic environment and main themes shaping markets around the region, broken
down over six key chapters, which consider the year ahead from the perspective of; a regional
and corporate assessment of the impact of the slowdown in different economies and sectors;
the transformation of the regional value chain and the corresponding changing dynamics; a
thematic look at Asia’s largest economies - China and Japan, and; a country-by-country
analysis and forecast.

As the end of 2019 approaches, a slump in investment and consumption continues to drag on
beleaguered domestic demand. Combined with worsened external conditions and structural
headwinds, Asia is ending the year with more of a whimper than on a bang. Looking ahead, while the
economic slowdown is expected continue across Asia, it is stabilizing.

Key findings from the report are as follows:

• 2019 has been a difficult year for Asia. China’s economy has decelerated faster than expectations
and previous years’ growth rates, with an estimated growth rate of 6.1% by year end versus 6.8%
in 2018. And this is not helped by structural headwinds such as worsening demographic trends
and higher indebtedness, especially in China’s case. Looking into 2020, we expect the sharp
slowdown in 2019 to decelerate, with China growing by 5.7% in 2020 from an estimated 6.1% in
2019. Developed Asia will still suffer from weak demand and a decelerating Chinese economy,
with growth hovering around 2.3%. ASEAN will continue to be the bright spot, excluding
Singapore, with average growth reaching 4.8% in 2020. The slightly improved scenario, in terms
of the speed of deterioration is due to the cyclical of some of the key sectors for Asia’s value chain,
such as the semiconductor and tech industries, and the easing financial conditions.

• External demand may stabilize but the V-shaped recovery hoped for remains elusive; the key
external risks for 2019 are also ebbing, namely Brexit and the trade-war. To add to the positive
sides of 2020, central banks will continue to be supportive although China and India will need to
deal with higher short-term food inflation. Fiscal easing is also limited both in India by public
finances and, to a lesser extent, also in China. Asia is expected to muddle through in 2020 with
less friction to growth but saddled by demographic trends and, in some cases, by growing debt.
ASEAN is clearly the bright spot but with heterogeneity across geographies. India will need major
reforms to realize its potential.

• As for the main risks, US-China strategic competition continues to be key in the region. Downside
risks, especially in the short run, are obvious, but the outlook is brighter for South and Southeast
Asian economies as they may benefit from the reshoring of production away from China. The other
key risk lies in China’s increasingly weak corporate health and especially private companies.
Credit to the private sector is key for growth in China but the transmission mechanism is not
working well for a number of reasons, including rising fragility in smaller banks which are the most
important source of funding of private firms. That said, while Japanese firms, well-cushioned by
less leverage and low rates, do not have a debt problem, growth is a concern.

To learn more about these themes in more details, please refer to the full report attached.

- Ends -

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 About Natixis
Natixis is a French multinational financial services firm specialized in asset & wealth management, corporate & investment
banking, insurance and payments. A subsidiary of Groupe BPCE, the second-largest banking group in France through its two
retail banking networks, Banque Populaire and Caisse d’Epargne, Natixis counts nearly 16,000 employees across 38 countries.
Its clients include corporations, financial institutions, sovereign and supranational organizations, as well as the customers of
Groupe BPCE’s networks. Listed on the Paris stock exchange, Natixis has a solid financial base with a CET1 capital under Basel
3(1) of €11.4 billion, a Basel 3 CET1 Ratio(1) of 11.5% and quality long-term ratings (Standard & Poor’s: A+ / Moody’s: A1 / Fitch
Ratings: A+).
(1)
Based on CRR-CRD4 rules as reported on June 26, 2013, including the Danish compromise - without phase-in and including
current financial year’s earnings and accrued dividend (based on a 60% pay-out).
Figures as at 30 September 2019

Alicia Garcia Herrero

Natixis Chief Economist, Asia Pacific
E-Mail: alicia.garciaherrero@natixis.com

Press contacts:
Linda Pui Ryan Mellor Samuel Xiao
+852 3103 0118/ 9700 0178 +852 3103 0130/ 5315 2737 +852 3103 0128/ 9794 3686
NatixisCIB@citigatedewerogerson.com

www.natixis.com

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