Market Outlook 2021 Asia Pacific

Asia Pacific is the region made up of countries such as China, Indonesia, Japan, Vietnam, Thailand, South Korea, North Korea, the Philippines, and Taiwan, among others. The Second World War left major consequences in the region from the destruction of Japan to conflicts between countries such as China and Taiwan. The constant threat and the desire to improve themselves forced them to grow rapidly to become one of the regions with one of the most active economies in the world. Consulting firm McKinsey notes that in 2000, Asia accounted for 32% of global GDP in PPP terms and rose to 42% in 2017 and is on track to reach approximately 52% by 2040.

Asia Pacific is not a homogeneous region because there are enormous differences between Asian countries, in their economy, political systems, religions, culture, etc.

Nuclear threats from North Korea as well as it’s tense relationship with South Korea, the territorial conflict between China and Taiwan, abuses by the Myanmar army against the Rohingya minority, high territorial tension between India and Pakistan, and the trade war between China and the United States are political/economic problems that affect the security and stability of the countries of the region. President Trump has pursued an aggressive economic agenda against China that become even more restrictive since the emergence of Covid-19. The most recent example is the executive order, signed by Trump, which prohibits US companies and individuals from investing in firms that allegedly have ties to the Chinese military; creating chaos in Chinese markets where shares plummeted. Examples of that were China Mobile (-7.18%), or China Unicom (-11.35%). Biden’s administration is not expected to change the relationship between the countries; in December of 2020, he said that he would “hold China’s government accountable for its abuses on trade, technology, human rights, and other fronts.”

Asia Pacific will enter a new digital decade in 2021, where companies such as Huawei, Baidu, State Grid Corp, Tencent, among others will be on par with or even surpass the rest of the world in terms of innovation in technology-driven business models. For example, Beyond Limits an industrial and enterprise-grade AI technology company announced its plans to expand its presence in the Asia Pacific region through its regional headquarters in Singapore. A report from research group Tractica Omdia found that the market for AI in Asia Pacific is expected to reach a value of $136 billion by 2025, compared to $6 billion in 2017. On the other hand, since COVID-19 hit Asia Pacific first, it is expected to be the first to recover from the crisis, with an estimated growth of 6.9% in its GDP.

This article is in our Market Outlook 2021

Daniela Barrueta Huerta, BSs in Economics

Ivana Juarez Aguilar, BSs in Economics

Published by lisboninvestmentsociety


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