Although Asia Pacific will continue posting growth rates that are among the world’s highest, secondary outbreaks in major APAC markets along with headwinds from Europe will weigh on the region’s recovery through 2021. Multinationals should plan for consumer spending and private investment to recover but remain subdued across most markets. They should also expect some bright spots from public investment and government spending.
As executives pursue opportunities in this environment, they should prepare to deal with substantial uncertainty. Shifts in the global economy, continuing US-China tensions, and localized outbreaks and lockdowns will continue to create more volatility than the APAC portfolio has seen in decades. To maximize their chances of success, executives and their teams will have to hone the skill sets required to navigate uncertainty, something that is commonplace in more volatile regions but which few in APAC have had to develop over the last 20 years.
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. However, wealthier markets with more developed infrastructure are likely to get full access to vaccines before others, allowing their people to revert to pre-COVID behavioral patterns and economic growth more quickly.
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. Asia Pacific is the only region globally whose economy will recover to pre-COVID levels in 2021. 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.
- Where possible, prioritize sales in countries that are rolling out substantial above-the-line stimulus measures, as their governments are likely to have more money readily available for purchases and projects.
- Utilize our regional scenarios as well as our quarterly recovery forecasts 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. For more information on the key global events to watch in 2021 that will impact businesses operating in Asia, watch the full presentation of our Asia Pacific Events to Watch 2021 webinar.
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