Thought for the day

What Percent of Your Portfolio Should be Asian? A review of Asian GDP Data Quality Ratings


 
Last updated: 7 January 2025
 
As noted in our review of Asian Governance, Asian GDP is bigger than that of Europe, the Americas and Africa combined. Asia accounts for well over half of global GDP. And Asian GDP growth has accounted for almost 70% of global growth over the past decade. So, shouldn't Asia comprise 50%+ of your investments by value?

Probably not. The problem with Asia is that this vast geographical space (however defined) includes many countries you probably wouldn't want to live in, and on whose data you cannot rely. This Thought reviews the lack of accurate GDP data in parts of Asia. World Economics defines GDP Data Quality using 5 measures.

The table below shows Asian countries Data Quality Indexes split into 5 Ratings segments.

Asian GDP Data Quality Ratings
Ranked by GDP Data Quality Ratings groupo and country name. A = As good as it gets, E = Extremely poor
What Percent of Your Portfolio Should be Asian? A review of Asian GDP Data Quality Ratings


Data source: World Economics

Note: World Economics measures GDP in GDP Purchasing Power Parity terms, with added estimates for the size of the Informal economy, and adjustments for outdated GDP base years


Unfortunately, 35% of countries feature in the D and E columns. Any country with E rated Data Quality is likely to be an unreliable place in which to measure country comparative size, growth, wealth, inequality and more. And a D Rating should give serious pause for thought (for more on this subject see Places for Investors to Avoid).

On the third day of this Asian series, we bring both Governance and Data Quality Ratings Indexes together to review which Asian countries remain as candidates for investment, after removing those with poor Governance and Data Quality problems.

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