INTRA-ASIAN TRADE

FIDELITY: ASIA FOCUSING ON INTRA-REGION TRADE

Financial Standard, May 15, 2012

Despite growing fears about a decline in manufacturing, Asia is underpinned by resilient domestic demand and strong growth in intra-region trade, according to Fidelity.

Asian economies are less dependent on OECD countries than in the past, said David Urquhart, portfolio manager of the fidelity Asia fund.

"Today, Asia contributes more to world GDP growth than the US and the EU does combined," he said.

While there has been concern that consumption rates in Asian economies have not caught up enough to meet a decline in manufacturing, Urquhart said that the region has entered into a sweet spot for strong growth and consumption.

"On the economic side, when countries are poor, their savings rates are high. however once GDP per capita rises into the range between us$3,000 to us$10,000, savings rates decline and consumption becomes a larger portion of GDP," said Urquhart.

"In the past decade, for example, we saw china's GDP grow from US$1,000 to US$4,000, or expand four times over.

"Over the same period, we saw car sales in china grow from one million a year to 17 million vehicles a year, or by 17 times."

An ailing us economy and the dismal state of the EU have forced Asian markets to focus more on intra-region trade.

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