Although Asia Pacific will continue posting high growth rates, secondary outbreaks in major APAC markets along with headwinds from North America and Europe will weigh on the region’s recovery through 2021. Multinationals should plan for muted consumer spending, private investment, and exports across most markets, with some bright spots from public investment and government spending in the Asia Pacific outlook for 2021.
While Asia as a region will exhibit impressive growth, performance across its markets will vary dramatically. Countries that have managed domestic COVID-19 outbreaks aggressively and successfully (e.g., China and Vietnam) will lead the recovery, while those that have failed to slow the virus’ continued rise (e.g., India, Indonesia, and the Philippines) will experience longer-term economic damage and scarring. As businesses pursue opportunities in this environment, they should prepare to deal with substantial uncertainty. Headwinds to global growth, continued US-China tensions, and localized outbreaks and lockdowns will continue to create more volatility than the APAC portfolio has seen in decades.
Continued coronavirus outbreaks will weigh on Asia’s growth for the foreseeable future. Asia will continue to suffer from secondary COVID-19 outbreaks over the coming quarters that will impact prospects for profitable growth by disrupting business activity, weighing on household incomes, and forcing governments to divert resources toward epidemic management.
Government stimulus will support fragile economies in the coming quarters. Governments across Asia are attempting to offset the pandemic’s economic impact with substantial stimulus. These packages, which vary in size and scope, have the potential to create opportunities for companies in the short term but will put pressure on government budgets in the long term.
Asian markets will exhibit marked differences in their recovery timelines. Regional executives who have a clear view of recovery timelines for Asian markets will be better positioned to allocate resources across their portfolio, challenge their local teams’ assumptions, and manage expectations from corporate than those who do not.
Actions for Business Professionals
- Pressure-test your omnichannel strategy in key countries to ensure your route to market will remain robust regardless of whether your customers are in lockdown or able to move freely. Companies that can serve customers effectively through new outbreaks are likely to take market share from those who cannot.
- Utilize scenario planning to pressure-test your strategic plans for 2021 and determine where there may be potential upside and downside risks for your business.
Download an executive summary of our 2021 Asia Pacific Outlook today.
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