The wise words of Greek philosopher Aristotle encapsulate my predictions for Asia in 2023: “It is during our darkest moments that we must focus to see the light.” And the overall outlook is certainly gloomy.
Forecasts for 2023 growth in developing Asia were downgraded from 5.3% to 4.9% by the Asia Development Bank in September, which cited challenges such as inflation, weaker external demand, supply chain disruptions and continuing coronavirus lockdowns in China.
The World Bank says that governments in the east Asia-Pacific region also need to make difficult trade-offs about short-term support for their citizens at the risk of undermining longer term goals of growth, security and sustainability. Even Asian powerhouse China’s expected growth of 4.5% in 2023 will be slower than most other Asian economies, due to Beijing’s zero-Covid policies and growing geopolitical tension with the West.
Despite these dark economic predictions, can Asia expect some good news and trends? Some industry players, such as the tech sector, remain upbeat in areas like IT and cloud services, govtech, fintech and edtech.
South-east Asia remains a world leader in adopting new technologies such as 5G, media streaming, wireless communications, artificial intelligence and big data. Given its digital consumer population of 370 million, it also enjoys the highest adoption of e-wallets, cryptocurrencies and non-fungible tokens.
In terms of foreign direct investment, Asia will likely see some intra-regional diversification next year. Investors will continue to diversify their investments away from China to avoid supply chain disruptions caused by a lack of employees and supplies, and government-ordered lockdowns.
Investors will continue to diversify their investments away from China to avoid supply chain disruptions caused by a lack of employees and supplies, and government-ordered lockdowns.
Smart manufacturing and smart logistics players are expected to improve operational efficiency of businesses in the region too, with the help of digital tools and anti-disruption practices like in-sourcing and local sourcing.
Opportunities remain for Asian countries that offer growth drivers such as a good digital infrastructure and ecosystem and open market access. It is also important for countries to have strong laws protecting intellectual property, easier credit access and a big pool of consumers who are quick adopters of tech and foreign goods.
In this regard, the likes of South Korea, Singapore, Australia, Malaysia, Indonesia and Vietnam are worth considering in executives’ 2023 market portfolio review. Following Aristotle’s logic, focusing on these countries could offer light for businesses in an otherwise gloomy moment.
Lawrence Yeo is CEO of AsiaBIZ Strategy, a Singapore-based consultancy that provides Asian market research and investment/trade promotion services.
Lawrence's previous columns:
- Vertical integration is back on the agenda
- The nuance of remote working’s spoils.
- Less regulation, more collaboration.
This article first appeared in the December 2022/January 2023 print edition of fDi Intelligence. View a digital edition of the magazine here.