Asia Pacific: June 2016

Economic overview

Although India and some other major Asian economies will see improved economic growth next year, the outlook is less positive elsewhere – including in China. 

China’s economy is expected to grow by 6.5% next year, down from 6.7% this year, according to the latest outlook from the World Bank, published in June. This follows GDP growth of 6.9% last year, marking another year of reduced growth for China – a trend that is expected to continue through 2018. The weak external demand weighing on growth is being tempered by the government’s efforts to help stabilise the economy. China’s service sector has overtaken manufacturing to become the major driver for economic growth. Although economic expansion is forecast to slow this year, gas consumption is increasing at a higher rate than last year and is anticipated to continue to do so for the rest of 2016.

Japan’s GDP growth is expected to slow this year. In 2015, the country’s economy expanded by 0.6%; this year and next, it is forecast to grow by 0.5%. The limited economic growth is weighing on the energy market and on gas demand. As electricity consumption has been weak, the upside for gas demand growth is limited even with an uptick in seasonal consumption expected over the summer.

In contrast, India’s GDP growth is expected to pick up next year. The country’s economy is forecast to grow by 7.6% in 2016 and 7.7% in 2017. Government measures, including increases in public spending and improvements to the country’s tax regime, are expected to support strong economic growth. This in turn will continue to support energy market growth and increased demand for gas. Demand has been rising strongly so far this year, and shot up by 23% on an annual basis in April. As the gas market continues to expand over the coming months, the country’s need for imports will also grow.