Outlook 2014: Dynamic Asia Pacific as stable industrial base

Asia Pacific remains a highly dynamic and diversified region with an economic growth that is outperforming other regions of the world. High investment inflows, robust industries and rising consumption are factors that continue to drive growth for the plastics industry in the region.

In its forecast, the Asian Development Bank (ADB) expects the region to post a 6.2% growth in 2014. “Asia and the Pacific 2013 growth will come in below earlier projections due to more moderate activity in the region’s two largest economies, China and India,” according to ADB Chief Economist Changyong Rhee. “While economic activity will edge back up in 2014, current conditions highlight the need for the region to exercise vigilance to safeguard financial stability in the short term while accelerating structural reforms to sustain economic growth in the longer term.” Southeast Asia’s growth will be affected by the soft performances of its three biggest economies with lackluster exports and moderating investment weighing on Indonesia, Thailand and Malaysia. By contrast the Philippines is expected to continue to perform strongly. The sub-region will grow faster at 5.3% in 2014 compared to 2013, as it benefits from an investment recovery and firmer exports, supported by improved global trade and recent currency depreciations.

Central Asia’s economic growth is expected to post an average of 6% in 2014. Expectations for increased consumption and investment in Fiji, and higher tourist arrivals in the Cook Islands, are largely offset by lower growth projections for Kiribati, Nauru, Solomon Islands, and Timor-Leste.

The Asia Pacific region is also expected to weather the slowdown in the US and Europe to maintain its strong position as an industrial powerhouse of the world. The formation of the ASEAN Economic Community (AEC) in 2015, represents a huge opportunity for manufacturers serving the plastics industry, as companies reorganise and retrofit to enhance their competitive edge across markets in Southeast Asia. This favourable business environment means the region’s plastics production will continue to outpace the rest of the world in terms of value and volume by 2020, when Asia Pacific is expected to account for more than 50% of the global plastics production.

Technology and Equipment

Automation as important step towards cost-efficiency

Global demand for plastics processing machinery is expected to rise by at least 6% annually through 2015 to $28.9 billion. Gains will be driven mostly by emerging economies in the Asia Pacific. Extrusion equipment will post the strongest gains by product, while construction will be the fastest growing market. Other important applications for raw materials and machinery for plastics production are medical/healthcare, automotive, and electronics/electrical sectors.

Machines that promise operational efficiency and cost-effectiveness will rule, according to big players in the plastics industry. This is due to the rising cost of production as a result of higher prices of raw materials and surging electricity and labour costs Automation will also be an inevitable direction that will have to be undertaken as most growing companies acquire the technologies of the west, even as they look beyond Asia Pacific as markets for their products.

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