Asia’s 2022 Prospect : China and US economies and geopolitical tensions set to dominate outlook
In this final instalment of analysts’ predictions ahead, we see that China-US global and regional political tensions and economic measures are likely to play the biggest roles in the unfolding of the Asian economic and political landscape this year.
China’s Covid-19 vigilance to impact supply chains. Global supply chains in and out of China will continue to be stretched, affecting everything from pricing to production and shipping as China is likely to continue its zero-Covid policy. Quarantines and strict travel restrictions whenever there is an outbreak in China may further exacerbate supply chain disruptions, especially if new variants such as Omicron continue to sprout and surge. This zero-tolerance policy looks set to be redoubled even with outbreaks occurring, as the country prepares for the coming Lunar New Year in February, and the 2022 Winter Olympics shortly after.
Tough choices for Asia as global power plays continue. Geopolitical uncertainty both within and outside of Asia, fueled by tensions across the Taiwan Strait and Russian troop deployments at Ukraine’s border, look likely to escalate this year. All of these may impact Asia’s relationship with China and the US. This competition for influence, could be seen this year in the progressive rollout of China’s digital yuan initiative. In the long-term, the country seeks to position the digital yuan as an alternative “anchor” to the global currency system, knocking the US dollar from its perch as the international standard. All of these will, in time, leave other Asian nations with difficult choices as global political and economic systems morph.
Growth for S.E. Asian nations despite subdued China forecasts. Even as China and India report slower-than-normal growth, S.E. Asians are likely to see improvements as they open up cautiously amid the pandemic recovery. Southeast Asia’s growth rebound, according to forecasts, would be seen in the second half of 2022. One bugbear could be inflation in import prices as Asian economies are reliant on large amounts of imported energy.
Will Asian nations see growth in tandem with the return to a new normal in 2022?
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