The financial crisis and subsequent developed world recession have overshadowed changes in the developing world that have implications for investors everywhere.
These changes–detailed in a landmark new Australian government report on Asia's economic rise–reveal an historic transformation which has shifted the axis of global economic activity and which is creating a huge new middle class.
The report is full of eye-popping statistics. For instance, in the past 20 years, China and India have almost tripled their share of the global economy and increased their absolute economic size almost six times over.
By 2025, the region as a whole is projected by official forecasters to account for almost half the world's economic output.
Asia's Rising Share of World Output
Source: Conference Board. GDP is adjusted for purchasing power parity (2011 prices).
The macro-economic statistics are matched by equally arresting micro-economic detail. Between 2000 and 2006, for instance, around one million people were lifted out of poverty every week in East Asia alone. Japan, South Korea, Singapore and, more recently, China and India, doubled their incomes within a decade.
Growing productivity and expanding wealth are leading to improvements in education, housing, infrastructure and governance. The demographic dividend from rapid population growth and more skilled workforces has been rising savings rates.
But this isn't just an economic phenomenon. Lives are being changed for the better. In Indonesia, for instance, the report says children born today can expect to live to their late 60s on average, compared to just 45 in 1960.
What does all this mean for investors? It means a reality check for those downcast over media talk of the global economy coming to a standstill, of growth being a thing of the past and of innovation and progress stalling.
The downbeat mood might be understandable for those living in Europe or North America, but those of us in the Asia Pacific living in the neighbourhood of this massive transformation can still see plenty of cause for hope.
Rising prosperity and living standards in the world's most populous region mean rising business opportunities. Expanding businesses need increasing amounts of financial capital, raw materials and human capital.
With open markets and the free-flow of information around the world, this means opportunities for diversified investors everywhere, not just in Asia, to share in the wealth created via this transformation.
By early next decade, the combined output of China and India is expected to exceed the entire output of the established Group of Seven industrialised nations – the US, Japan, Germany, France, the United Kingdom, Italy and Canada.
"Asia will not just be the most populous region in the world. Asia will be the biggest economic zone, the biggest consumption zone and the home to the majority of the world's middle class," the Australian government report concludes.
"While the shape of the Asian century is not set in stone, there are good reasons to be optimistic. Even if there are economic cycles, as is likely, they will occur around a trend of rising income."
This might be an Asian story, but it is a global change for the better and one we can all share in as investors. It's a story worth keeping in mind when you are bombarded with the bad news from Europe and the US every day.
