Asia growth will prove pessimists wrong

While the region's productivity has slowed down recently, this has been in line with the rest of the world, coinciding with the current soft patch in the global economy. We expect Asia's productivity to rebound as the global growth cycle gathers pace. There is also room for reforms to boost the region's productivity following many of the electoral cycles in 2014.

Third, we expect external demand to provide more of a boost to Asia's growth in 2014-15 than in the past few years. We disagree with the notion that the US recovery is "importless". The export pattern around the region so far in 2014 has been one of improving exports to the US and Europe.

The key point that gets ignored in the "importless recovery" argument is that the US trade deficit excluding petroleum has been widening since 2010. This means that the US is having a positive impact on global growth outside of petroleum-producing economies, which include the majority of Asian countries.

US consumption is likely to gain positive momentum in 2014. Mortgage rates have fallen, which is a positive leading indicator for the housing market. Also, the US is only part of Asia's external growth story. The European economy was still in recession in 2013. But it is likely to grow by 1.3 percent in 2014, based on our core scenario, helped by improving consumer spending.

How well China's domestic demand holds up is more of a concern for markets in Asia. Asia's broad export pattern so far in 2014 has been better demand from the US and Europe and soft figures for China. More stimulus measures in China in the second half of this year may counter the country's engineered slowdown in credit growth.

We expect the growth optimists to win out against the pessimists in 2014 and 2015 as the global recovery gathers pace and this should be good news for current account balances in the region.

The main risk to our view is if China scores an "own goal" - in the form of a policy error - that causes a major growth driver of the region to stall. While this risk cannot be fully ruled out, there are already signs that Beijing is open to further policy easing to ensure the 7.5 percent growth target is achieved in 2014.

The author is head of macro research, Standard Chartered.