Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 228

The ascent of Asia and what it means for Australia

The proposed departure of the UK from the European Union could lead to other difficulties and defections, and the US will be more insular under the Trump presidency. These trends point to an even greater need for Australia to consolidate its future in its own region of the Asia Pacific, and indeed in the wider arena of Asia.

In 2017, the shares of world GDP are forecast to be: Asia Pacific (33%), Indian Sub-Continent (9%), North America (19%), Central and South America (6%), Western and Central Europe, mainly the EU (17%), Eastern Europe (4%), Middle East (7%) and Africa (5%). These are higher shares than contemplated for the two Asian regions just 18 months ago.

Asia’s place in the world

Calendar 2016 was a landmark year. It was the first time the GDP of the East surpassed the GDP of the West, at least in purchasing power parity (PPP) terms, which is the most important measure of economic size. And in 2017, Asia, at over 42% of the world’s GDP, will exceed Europe and North America combined.

Asia’s economic composition in 2017 and its growth prospects, broken up by nations, are shown in the two following exhibits, the giants being China, India, and Japan.

Australia’s place in the world and region

Australia is tiny, at 3% of the region’s GDP, yet that still puts us as the 19th largest economy in the world of 230 nations and protectorates with 1% of its global GDP (in PPP terms). Tinier still is our population of 24.5 million at 0.33% of the world population of 7.4 billion.

The table below is an added reminder of our smallness among Asia’s economic and populated giants, in everything except land mass.

The next exhibit below shows the degree of our scarcity of population. Australia’s top one-third, with a land mass of 2.6 million square kilometres, has a population of just over a million people. Our nearest neighbour, Indonesia, with less than three quarters of that land mass, has a population nearly 250 times greater!

In case we think of the top third of our continent as dry and largely uninhabitable, that part of our land mass has 60% of our annual water supply.

There are now seven Asian cities in the world that are of a similar or greater population size than our entire nation, with its extraordinary land mass. They are: Tokyo (38 million), Shanghai (34 million), Changquin (> 32 million), Jakarta (31 million), Karachi (25 million), Delhi (25 million) and Beijing (25 million). More will follow.

None of this should lead to xenophobia of the sort we have exhibited at various times in our history. We are already on our way to becoming a Eurasian society by the end of this century, having been European in the 20th century and British in the 18th century. We will be on our way to becoming an Asian society in the 22nd Century, albeit a rich and westernised Asian society.

We are expected to have a population of 70 million by the year 2100. Even at that stage, some Asian cities will be more populated than our entire nation. So, re-evaluating our place in Asia and our relevant population – given our land mass and resources – will be an ongoing, neighbourly and moral responsibility for many generations to come. We will need big and enlightened minds in such a significant and powerful part of the world where we live and work.

 

Phil Ruthven is Founder of IBISWorld and is recognised as one of Australia’s foremost business strategists and futurists.

 

  •   23 November 2017
  • 4
  •      
  •   

RELATED ARTICLES

Are recessions a thing of the past?

Asia: bull or bear in the Year of the Goat

Australia’s default: who do you rescue?

banner

Most viewed in recent weeks

Why spending more in early retirement can improve lifetime income

Conventional wisdom encourages retirees to preserve superannuation. But if those likely to qualify for the Age Pension later in life spend a little more today, it may deliver higher lifetime income and a more stable retirement.

It’s time for LICs to die

A high-profile dividend cut and a prominent fund manager’s apology have reignited a long-running debate. If investors can access similar exposures more cheaply and efficiently elsewhere, what exactly is keeping LICs alive?

Testamentary trusts survived the trust tax. The drafting battle has just begun.

The fight over testamentary trusts looked settled. Then the draft legislation arrived. Hidden in a technical detail is a question that could force many families to rethink wills they thought were already future-proof.

Is it time to bail on Australian stocks?

For generations, Australian investors have backed banks, miners and dividends. But has that loyalty come at a cost? A look at the numbers raises an uncomfortable question about where future returns will come from.

The new capital gains tax trap for your portfolio

Investors have long accepted one portfolio rule without much question. A major tax shift could change that calculation entirely, forcing difficult trade-offs between risk, discipline and an overlooked cost lurking beneath.

The investing rule that explains the next market crash

What if investment success depends less on picking the right assets and more on understanding the decisions of other investors? A principle borrowed from game theory offers a different perspective on markets.

Latest Updates

Fixed interest

Higher yields are creating opportunities in global bonds

Bond markets are adjusting to a new reality, but not in the ways investors expect. With markets repricing and capital competing for attention, investors may need to rethink where resilience and opportunity lie. 

Economy

Are we in a recession?

What if the warning signs are already everywhere? From supermarket aisles to company failures, investors are being bombarded with recession signals. But most face a different risk that can be just as dangerous for portfolios. 

SMSF strategies

Meg on SMSFs - Division 296 actuarial certificates

The tax bill might be yours, but the event that caused it may not be. A key Division 296 calculation can sometimes attribute earnings in ways that many SMSF trustees won't instinctively expect or fully appreciate.

Property

The first impact of negative gearing reform is not the tax bill

Negative gearing changes formally begin in 2027, but the first consequences may already be here. A subtle shift is quietly influencing who can borrow, how much they can access and which property strategies still stack up.

Economy

The oil market is running out of easy answers

The biggest threat to markets may not be what investors are watching. The numbers have stopped adding up and supply is harder to measure, with forecasts becoming simple guesses. A more fragile reality is being masked.

Investment strategies

The state of investor knowledge in Australia

Australians are investing more than ever, yet a surprising divide is emerging between those building wealth effectively and those making costly mistakes. Surprisingly, the gap has little to do with income, age or starting capital.

Taxation

Complexity and capital gains

A case study shows that the ‘30% minimum CGT’ is a poorly conceived tax that adds significant complexity to an already over-complex system. A less complicated model would create a much fairer progressive tax scale.

Sponsors

Alliances

  • ASA-Logo-RGB-ActiveGreen-web.png

© 2026 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.