Global growth has been dramatically impacted by the COVID-19 crisis, projected at an alarming -4.9 per cent in 2020, the worst economic downturn since the Great Depression1. The multiple waves of the pandemic, the synchronised deep global downturn, depressed consumer spending, mobility restrictions, and contraction in global trade have had an unprecedented impact on the global economy2. The IMF forecasts that all major advanced economies are projected to record growth worse than -4.9 per cent. China, India and the ASEAN 53 are all projected to record growth rates better than the major advanced economies and the global growth rate. China is forecast to grow at 1 per cent, India at -4.5 per cent, and the ASEAN 5 at -2 per cent4. Australia is now forecast to record -4.5 per cent growth in 2020, two percentage points better than the April forecast5. The successful containment to date of the virus and gradual easing of restrictions on business are amongst the reasons cited for the improvement in Australia. The Australian Government’s own forecasts (as part of its Economic and Fiscal Update in July 2020) reveal that the economy is forecast to record -2.5 per cent growth in the current financial year and that unemployment is expected to be -8.75 per cent in the same period. On a calendar year basis, the contraction is expected to be -3.75 per cent in 20206. The OECD is less positive on the state of the Australian economy, noting a likely contraction of -5 per cent in 20207.
The impact of the pandemic challenges the broadly heralded pre-pandemic view of the Asian Century. Consistently cited projections over the last decade have held that the real GDP of Asian economies are projected to exceed the combined economies of the Americas and Europe by 20308. Asia is also expected to account for over 70 per cent of world capital stock by 2030 and lead capital exports9. Even sooner, by as early as 2020, the middle class consumers in Asia were expected to outnumber the middle class consumers in the rest of the world combined10. These macro-level narratives have influenced national, industry and firm-level agendas in Australia and across the world in respect to the scale of opportunity in Asian markets.
As Prime Minister Lee from Singapore recently highlighted, notwithstanding the extraordinary economic growth in Asia “an Asian Century is neither inevitable nor foreordained”11. While this assessment is a sobering reminder of the impact of geostrategic tensions between China and the US, regional tensions and the impact of the pandemic, it should also be viewed in a relative context. From an economic perspective, projections of the region remain that it will continue to be the growth engine for the global economy and the macro-level narratives of the size of the opportunity in Asia still retain their value12. Realising the opportunity however, may be more complicated, requiring greater government-to-government engagement, deeper business-to-government engagement, and a recognition that economic, defence and strategic national interests will prove increasingly harder to decouple.