Why 2015 is Asia's most challenging year yet since 2009

Are recession nightmares finally becoming reality?

Asia has been reigning the headlines this year as consumption, demand, and oil prices unforgivingly plague the region's slow growth. This has crushed analysts' dreams of an emerging Asia finally keeping up and even beating the US when it comes to global GDP shares. HSBC recently published a report explaining the simple answer behind the fears of recession despite an expanding, albeit very slowly, Asia. 

Charts 1 and 2 from HSBC show the global GDP share of various economies. The first is based on purchasing power parity, which generally boosts the size of emerging markets by adjusting for lower prices. 

"On this basis, emerging Asia has been dominating for a while already, with its global output share in 2015 estimated at 33%, roughly double the US or EU. But let’s focus on global US dollar shares – arguably a more relevant measure of incremental demand when it comes to things like trade," HSBC said.

"Here, based on the latest IMF forecasts, emerging Asia (at 25%) should top the US (24%) in 2015. And that’s even taking into account tumbling currencies against the US dollar through August."

So, if Asia is still expanding, why all those headlines about a possible world recession? HSBC's answer is: mostly because of other regions in the world. On a US dollar basis, things look indeed dire from a global perspective. The third chart shows the contribution to world GDP growth (in USD terms) by individual regions.

"This is turning out to be the most challenging year since 2009. But, mind you, Asia is at least still contributing positively to world demand (even if its travails are hurting other regions, for instance through the slump in commodities)," HSBC said.