Highlights

  • Strong demand in China will drive regional growth
  • Japan nuclear restarts hit new hurdles
  • Imports continue to decline in Japan and South Korea
  • Spot LNG prices are coming under increased pressure as the region enters spring

Economic overview

China’s economic expansion is set to slow, but Japan’s GDP growth could improve this year and India is expected to continue to grow strongly.

China’s economy is expected to grow by 6.5% this year and 6.2% next year, according to the latest projections from the OECD. This outlook follows the same downward trend in growth seen in the World Bank’s and the IMF’s most recent projections. The rebalancing of China’s economy from manufacturing to services is one of the reasons for the reduced outlook. Although China’s weaker economic expansion will limit the upside for gas demand growth this year, consumption is still expected to rise at a faster rate than last year.

Economic outlooks: Real GDP % growth

  2015 2016 2017
Japan 0.4% 0.8% 0.6%
China 6.9% 6.5% 6.2%
India* 7.4% 7.4% 7.3%
*Fiscal years starting in April. Source: OECD February 2016 Interim Economic Outlook Forecasts

Japan’s GDP is expected to grow by 0.8% in 2016 and 0.6% in 2017, an improvement on the 0.4% growth seen in 2015. However, although the outlook for domestic consumption is positive, weak external demand could limit the potential for economic expansion this year. Even with improved growth, Japan’s gas demand is expected to fall in 2016 as gas continues to struggle for a share of the power market.

India’s economy is expected to grow by 7.4% this year, the same rate as in 2015, according to the latest projection from the OECD. India’s economy expanded by 7.3% in Q4 2015, supported by increased consumer and government spending. Although growth could slow next year – to 7.3% – and further structural reforms will be needed to support continued strong growth, it is still a relatively robust expansion and would make India the fastest-growing economy in the world.