Highlights

  • China's gas demand and imports are increasing
  • LNG exports from Southeast Asia fell in early 2016
  • Weak prices are causing delays to FIDs on new LNG export projects
  • Indian domestic and import prices are declining

Economic overview

Major Asian economies look set to slow down this year.

China is trying to wean its economy off its dependence on investments and exports, and despite strong growth in exports in March, the country’s GDP growth is expected to fall to 6.5% this year compared with 6.9% in 2015. The slowdown is expected to continue in 2017, with the economy forecast to expand by only 6.3%. Supply-side reforms and an increasing labour shortage are some of the factors that are dragging on China’s growth. The slowdown has raised concerns about the negative effect on the global economy. However, despite the cooling economic growth, China’s gas demand is expected to rise at a faster rate this year than in 2016, with gas consumption having increased by 18-19% at the start of the year.

Asia GDP forecast

  2014 2015 2016 2017
China 7.3% 6.9% 6.5% 6.3%
South Korea 3.3% 2.6% 2.6% 2.8%
Taiwan 3.9% 0.7% 1.6% 1.8%
India 7.2% 7.6% 7.4% 7.8%
Indonesia 5.0% 4.8% 5.2% 5.5%
Malaysia 6.0% 5.0% 4.2% 4.4%
Source: Asia Development Bank, Asia Development Outlook 2016

With GDP growth forecast to be 7.4% this year, India’s economic growth will be the strongest of all Asian countries in 2016 apart from Myanmar. Nevertheless, its growth will be slower than last year, when India’s economy grew by 7.6%. Reduced exports and lower investment are expected to weigh on India’s growth this year, but the economy is anticipated to pick up in 2017, with growth forecast to increase to 7.8%, supported by stronger investment levels. Gas price cuts could support offtake from some sectors but coal will remain competitive – particularly in the power sector – limiting the upside for growth.

Elsewhere in the region, Indonesia is anticipated to see improved growth this year. The country’s GDP is expected to grow by 5.2% in 2016, up from 4.8% last year, and by 5.5% in 2017. However, the country has seen setbacks to its LNG export expansion plans. Low prices have caused delays to FIDs on new LNG supply projects in Indonesia as well as Australia.