A rich tapestry of insights Voice of Asia, January 2017
With almost 60 percent of the world's population, Asia has become a hub of global diversity and innovation. And despite some downbeat forecasts and threats of currency and trade wars, the region looks to move steadily forward, powered by a new, optimistic generation of consumers.
Voice of Asia is also available via PDF in the following languages:
The Asian century is shaping, cultivating, and driving a dynamic future for business and society. Powered by almost 60 percent of the world’s population, the region has become a hub of diversity and innovation.
Our Voice of Asia series brings to life the challenges and opportunities facing the region today and tomorrow. The potential has never been greater to create a cohesive narrative that reflects the interdependence of the region and provides a glimpse of what’s possible across Asia, shaping a more positive outlook overall.
In this edition, we focus on key unifying themes—from growth to trade, culture to commerce—that underpin Asia’s current and future prosperity.
This is our voice, the voice of Asia.
2017 will be better than you think
Our first report is Four things you need to know about Asia in 2017. After years of disappointment, global growth may well be about to surprise on the upside, and despite the protectionist rhetoric issuing from the United States, it is Asia’s economies that are in the box seat for the coming year.
But that’s not what you’ve been hearing lately, because forecasters are still too gloomy. Whereas the International Monetary Fund still predicts only slow and fragile global growth, we see evidence that it could in fact accelerate, with leading indicators already pointing to a lift in world trade.
Asia’s major markets of China and India are powering ahead, and growth in most other countries in the region is strengthening, while the United States is throwing off recent gloom and notching up its best performance since 2014.
At the same time, the Eurozone economy is edging up, and two of the world’s other biggest emerging markets, Russia and Brazil, are showing increasingly positive signs.
This good news shouldn’t be a surprise: It simply says that the global economy is finally normalising after a series of shocks that began with the global financial crisis and then, in quick succession, the Eurozone debt crisis and the geopolitical shocks in the Middle East, Europe, and Asia.
The leading indicators for world trade are rising, and the benefits of that are already spilling into Asia via accelerating export orders.
That’s the beginning of a virtuous circle in which global growth triggers an upsurge in trade that, in turn, fuels stronger growth. Asia’s emerging economies will be direct beneficiaries as they cash in on the growth of their major export markets and their own economic reforms.
Trump, trade, and tariffs
Our second report, Trade to trump protectionists and boost global growth, provides a more detailed analysis of the trade recovery now under way.
Of course, there are risks, with a cloud over global financial stability; rising geopolitical tensions in the Middle East, Europe, and Asia; and the surprise election of Donald Trump, an unknown quantity, as US president.
And the biggest risk of all for Asia in 2017? That the global currency wars spill over into trade wars.
We see the continuing devaluation of the Chinese yuan as necessary, but it’s possible that other Asian currencies will also fall—which could tempt the incoming US president to follow through on his protectionist campaign rhetoric.
As president-elect, Trump has toned down some of his initial campaign promises. Economists hope he will similarly water down his trade policy, which has the potential to severely damage US-China relations, undermine the competitiveness of US multinational corporations and their global supply chains, and trigger the global proliferation of protectionist measures.
Asia’s additional line of defence—a healthy consumer
Nevertheless, Asia has another shield: If global growth isn’t as strong as we expect, or even if trade tensions threaten to boil over, Asia’s consumer is in remarkably good shape.
Our third report, Asia’s weapons of mass consumption, shows how consumer booms are increasingly powering Asia’s mega-economies, China and India.
A new and optimistic generation is taking its place in driving the direction of their economies: one that is technologically savvy, comfortable with the borderless consumerism of the global middle class, and yet imbued with the consumption-smoothing instincts of its parents and grandparents.
These new consumers are exactly what Asia and the world need right now. They’re inherently optimistic and incredibly open to innovation and new ideas. They’ll make enthusiastic importers as well as formidably competitive exporters. And yet, like consumers everywhere, they will be a stabilising force in their giant economies.
That means they’re likely to play an anchor role for 2017 regardless of other developments.
What more could Asia or the global economy ask for?