The scale and speed of the shift from west to east has been accelerated by the global financial crisis, with Hong Kong estimated to become the world’s main international financial centre within 3 years, according to a new report by The Institute of Chartered Accountants in England and Wales (ICAEW).
Before the 2007 financial crisis, there were more than twice as many financial jobs in London and New York than in Hong Kong and Singapore. However, with East and South East Asian countries affected less than Europe and the United States, and with their financial sectors becoming ever-more sophisticated, the two countries have now become attractive destinations for jobs.
At the current rate, the number of financial service jobs in London would fall below Hong Kong by 2015, with Singapore following closely in fourth place.
“The days where Singapore and Hong Kong were seen as backwaters for less successful London bankers are over," says ICAEW Economic Advisor and Cebr’s Chief Executive, Douglas McWilliams.Finance sector jobs in Singapore are expected to double from just over 100,000 in 2007 to about 200,000 in 2017.
McWilliams adds that the dynamic growth of Asian economies has created a booming demand for financial services, and – with the growing influence of Hong Kong and Singapore – an increasing number of international talent is looking east for better career opportunities and jobs.
Looking ahead, the internationalisation of the Chinese Yuan should support growth in Hong Kong while Singapore will continue to capitalise on its strengths in wealth and asset management.
Elsewhere in South East Asia, the population of the region is expected to rise by about a quarter, to an estimated 760 million in 2057. This increase should boost growth and safeguard the region’s competitiveness as working-age populations in China and Japan, as well as some European countries, begin to shrink.
With the exception of the Philippines and Malaysia (expected to grow by 85% over sixty years and 60% by 2085 respectively), most countries should benefit from a ‘demographic dividend’ which sees a falling ratio of dependents to those in work. This would free resources for investment and allow living standards to rise.
“Beyond population growth, raising output means increasing productivity; not just in terms of quantity but also moving up to value-added goods and services," says Mark Billington, Regional Director, ICAEW South East Asia. "This is something the Singapore government has recognised, and it demands growing numbers of highly skilled, highly qualified professionals. So as Singapore continues to become an essential business and financial hub for South East Asia, and a gateway to Asia as a whole, it is crucial to continue developing a strong accountancy and finance sector that can help support and enhance businesses in Singapore and the region.”
The report also highlights that though government spending varies widely across ASEAN nations, the ratio of government spending to Gross Domestic Product (GDP) leaves significant space for stimulus measures, especially for middle and high income economies. With manageable public debt,
South East Asian countries are in a position to boost growth through government expenditure in the case of a global recession.
Commodities have largely driven growth in ASEAN economies but the fall in prices of agricultural and oil products have limited export earnings. Crop failures around the world have also pushed up the cost of grain imports. This may affect domestic demand as food makes up a large part of the average ASEAN household’s expenditure.
As mineral prices decline, large projects by global mining companies in Indonesia have been put on hold. With mining making up nearly two fifths of the ASEAN economy, a sharp slowdown in investment could affect national and regional economies.
The report notes that it is clear the world economy has slowed this year; most BRIC nations (except Russia) and major western economies have all underperformed expectations. The bottom seems to have been reached for many emerging markets but with industrialised countries struggling, stabilisation is more likely than an immediate return to fast growth.