There’s still time to go before the traditional Christmas cheer but media owners across Asia will be hoping for less economic clouds to brighten up a somewhat gloomy outlook.

Macroeconomic fundamentals remain weak and fragile in Europe and the US. In Asia, notwithstanding higher demand during a festive fourth quarter, a slowdown in China and India, combined with fresh weakness in Japan, is hurting prospects for advertising growth.

The latest estimates from analysts at Media Partners Asia (MPA), publisher of Media Business Asia, indicate that net advertising revenues, measured after discounts, will grow by 5.7% in Asia this year (versus 5.2% in 2011), slowing to 4.7% in 2013 before a potential rebound to 7.0% growth in 2014.

The weak link

Japan remains the weak link. MPA’s numbers suggest that excluding Japan, Asia’s ad market will expand by 7.5% this year, 7.3% in 2013 and by 9.4% in 2014.

“We have not fallen below the 5% growth mark in Asia since the recessionary 2009, so our 2013 forecast is significant and cautionary,” says MPA director Vivek Couto.

“There remains much uncertainty around the extent of advertiser budgets and the level of sustained demand we will see post November, especially in China, India and Japan.”

Couto adds: “Our numbers highlight a significant slowdown in Japan, a reversal of the strong demand we saw during the first half. MPA now expects Japan’s ad market to marginally contract next year.

China will also grow at a slower pace of 8.7% in 2013, the slowest it has been since 2009, Couto continues.

India should recover sequentially from 7% to 11% growth, though Korea will soften a notch from 5.7% to 5.1%.

Taiwan meanwhile will remain in a relatively tough spot with a 1.3% projected increase next year, after an expected 2-3% contraction in 2012.

Some double-digit growth

Encouragingly, most of Southeast Asia will remain strong next year, led by Indonesia (~15% growth), the Philippines (an election-boosted 12% growth), and Thailand and Vietnam (~8% growth).

Economic volatility in Vietnam however may mean significantly more downside in that market.

Ad budgets in Indonesia remain exceptionally robust, for TV in particular, though there is increasing pressure from advertisers to manage cost inflation.

On the macro front, Indonesia’s fundamentals are solid. “Growth remains broadly strong and stable, and there has been a welcome easing of price pressures,” says Deutsche Bank economist Taimur Baig.

“But external finances are under strain as the current account weakens due to strong demand and decline of commodity prices.”

Thailand has also been strong for much of the year. Nielsen’s gross numbers suggest that ad spend grew by 11% year-on-year in the third quarter of 2012, the highest rate in five quarters. Key drivers include sustained domestic consumption.

Advertising gains were more modest in September, as gross spends grew by ~6.5% due to the impact of heavy rains, though a stronger October and November are likely.

Autos have emerged as the strongest spenders in recent months, with manufacturers ramping up sales before tax incentives for first-time car buyers expire at the end of the year.

A litttle wariness

While Southeast Asia’s macro fundamentals are positive, more needs to be done on the policy front to ensure a smooth transition to 2013.

“Asean ex-Singapore continues to perform well, but we see a need for monetary tightening in Indonesia, the Philippines and Thailand,” says Deutsche Bank Asia chief economist Michael Spencer.

“North Asia and Singapore are also where we see the need emerging for stimulus,” he adds. “Recent reforms in India are encouraging though these measures will not change the near-term inflation or growth outlook.”