Asia Pacific (APAC) will maintain its position as the world’s fastest-growing region in 2020, with growth numbers well above the world average. Its largest emerging markets are experiencing substantial increases in purchasing power, which are being spread across moderately expanding populations. Buoyed by loose global monetary policy, China, India, and much of Southeast Asia will continue to expand rapidly.
However, we expect the external environment for Asia to become more challenging in 2020. As the global outlook clouds over and risks tilt toward the downside, the region will see heightened levels of uncertainty.
Two factors will drive substantial change and shape Asia’s environment next year: US-China trade tensions, and inventory overhang. Continued tensions between the US and China will disrupt supply chains, draw investment plans into question, and prompt companies to re-evaluate their Asia footprints. These tensions will be exacerbated by a substantial inventory overhang, which will weigh on investment, employment, and wages, and put downward pressure on the prices of tradeable goods.
As APAC executives plot a course through this shifting environment, they should avoid a “business as usual” mindset. DuckerFrontier has outlined five priority actions for APAC executive teams to reduce the impact of uncertainty on your business:
Executives should prepare to make the case for Asia and begin evaluating potential scenarios for 2020. As policy shifts invalidate assumptions underpinning MNCs’ strategic plans, those that are prepared to course-correct quickly will edge out their unprepared peers. While this dynamic will likely require APAC executives to put more effort into the strategic planning process, it is also likely to pay dividends. Executives with robust plans that focus on building resilient organizations and capitalizing on pockets of opportunity will be in a position to outflank competitors who focus on growth at all costs, particularly if the global economy hits a patch of turbulence.
The APAC Regional Outlook is just one in our series of 2020 outlooks. Over the next several weeks we will be sharing more Regional Outlooks to help you and your regional teams with your strategic planning for next year. See what our Global Economics and Scenarios team is predicting for the global economy in 2020.
For more strategic priorities as you build your 2020 plans, purchase the full APAC Regional Outlook from our online store.