Asean

Sabrina Moles published in Asean, Global Lens

Asia and energy: how green is the East?

The energy transition is everyone's duty, but perhaps for the Asian continent it is a little more so. Why does the development of Asian countries interest observers so much?

The world of tomorrow is already in Asia. But also the climate crisis, economic and social inequalities, and the exploitation of resources. The search for immediate and concrete solutions to counter the environmental crisis is an established imperative, and no place in the world has more eyes on it than Asia. Although the big polluters reside in the global north and China, the rest of the more backward East also worries observers. In this part of the world, the population is growing, individual welfare standards are rising, and funding for housing and infrastructure is pouring in - all of which threaten to repeat the pollution patterns of recent decades.

Energy has quickly become the keystone on the table of those "concrete answers" that governments must develop within the next few decades, on pain of increasing emissions that are at the root of global warming. The so-called climate-altering emissions are responsible for the greenhouse effect and are only minimally attributable to the normal functions of the Earth's ecosystem. Excluding the curiosity for which water vapor is classified as the greenhouse gas most present in the atmosphere (an effect generated in turn by rising temperatures), we are talking mainly about carbon dioxide (CO2) and methane (CH4). These emissions are largely due to the production systems and standards of living of advanced countries, which in turn depend on energy sources.

Fonte: International Energy Agency (Iea)

As simple as it may sound, tackling a revolution in energy systems is a very complex operation that goes beyond the pure field of technological innovation. It is about changing the paradigm in the name of efficiency and "artificially" pushing diplomacy, markets and communities towards a single goal: emission-free development. Or almost. Today's objective, consolidated by international climate tables, is to succeed in offsetting the output of climate-changing gasses by offsetting their impact (with natural or technological solutions), and lowering the quantity in the most polluting sectors. In the Asian region, the process of transition to more sustainable and clean forms of energy becomes an even more multifaceted discourse, where the (almost) clean slate of the power grid in Myanmar shares the same continent as China's fourth-generation nuclear reactors.

Energy demand in Asia is set to double by 2030, and already accounts for about half (53%) of global demand. If in 1966 the GDP per capita of developing Asia was 330 dollars, today it is close to 5 thousand dollars. These are just two of the figures that focus the attention of observers on the Asian continent, where the production lever is being met by new consumption needs. But it also raises the concerns of experts, who fear that it could host the ploys of large multinationals to reduce their carbon footprint in the country of origin. Asia today continues to focus on economic growth driven by exports and traditional development models, and is slowly trying to emerge from the stagnation of the Covid crisis: assumptions that for skeptics validate a still uncertain future for the transition to "truly" sustainable development.

Fonte: International Energy Agency (Iea)

Despite the pandemic setback, emissions will continue to rise, and are about four times higher today than they were in 1960. To return to acceptable levels, according to scientists at the Intergovernmental Panel on Climate Change (IPCC), all countries would have to undergo the 2020 halt every year for decades to come. This brings into the balance the big polluters, such as China and the United States, but also the countries that are growing faster according to the same paradigms: Southeast Asia, Central Asia affected by the projects of the Belt and Road Initiative (Bri) and of course East Asia that has been driving the economic success of the "Far East" for thirty years. The history of the Four Asian Tigers is emblematic of this growing parabola, which, together with profits, has hosted and relaunched large global production centers. Today, in this part of the world, there is also a growing demand to raise the living standards of citizens, which in the eyes of governments often translates into ambitious prospects for growth in domestic consumption. To produce, and to live the life of the "ideal consumer", energy is needed.

Fonte: Fondo Monetario Internazionale (Fmi)

In this large mosaic of 4.4 billion people and 58 countries, the presence of China alone distorts the data on the environmental impact of energy systems in Asia. On the other side of the spectrum, we have 1/10 of the population that does not yet have access to electricity and relies on biomass combustion for cooking and heating. And the next step is granted by access to fossil fuels: since 2010, for example, over 450 million people in India and China have switched to LPG. 

Finally, there is the mirage of energy efficiency from renewable sources, which has long been considered one of the necessary solutions by major agencies such as the International Renewable Energy Agency (Irena) and the International Energy Agency (Iea). In a joint report, the two institutions have denounced how most countries are still underestimating the efficiency aspect applied to civil and industrial heating and cooling systems, which represent 40% of global emissions. It is one of the many facets of the energy transition that could see an advantage for those Asian nations that do not yet have consolidated energy systems and an electrical grid that needs to be extended rather than rebuilt. But it also poses new challenges: climate change will increasingly test the resilience of new infrastructure, in a part of the world where rising seas threaten millions of people and entire states (especially on islands). Increasingly frequent heat spikes and droughts are sending the power grid into a tailspin where hydroelectric capacity is lacking or the grid cannot sustain the demand for cooling energy.

In recent years, bilateral and multilateral agreements to implement new, more sustainable energy systems have multiplied, while countries promise to achieve net emissions within the next 30-40 years. Thus, increasingly defined legislation has emerged to lower emissions, improve access to more sustainable technologies and propose market measures that can divert investment towards the energy transition. Asia remains the region where coal continues to expand rather than shrink, but soon lower renewable energy prices, investor pushback and legislative pressure could reverse this trend. There is no shortage, and will be no shortage, of instances of imbalance on energy networks and markets (including labor markets): the energy transition is not a gala dinner.

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Stefano Rinaldi published in Asean, Economy and trade

It's never too late: fashion e-commerce in ASEAN

Thanks to new demographic trend, the online fashion industry is taking new shapes in ASEAN: However, brands should be thoughtful about their long-term online strategy in the region

In the e-commerce industry there is a single clear, crucial but often ignored rule: Never underestimate local purchase trends, especially if they touch more than 250 million active users.

South-East Asian e-commerce has grown by 85% year on year since 2017, an incredible rate if compared even to giants such as China (5%), India (10%) and Brazil (14%). For fashion and luxury, the ASEAN online market accounts for roughly 10% of the global industry.

This evolution finds its root in three different but complementary causes. First, the recent demographic shift which shed a light on the importance of GenZ (the ones born after 1997), and Millennials (the ones born after 1990) for the industry. Currently, the median of customers purchasing luxury fashion items online is 29 years old.

Second, constant increase in GDP growth combined with a higher propensity to spend, apart from the massive usage of social networks (around 8 hours per day) especially fuelled by super-apps. Platforms such as Shopee, Grab and Gojek have been crucial for ASEAN populations to easily access domestic as well as international goods and services.

Lastly, the true key to success for e-commerce in ASEAN has been the recent two-year lockdown. Over 43% of current online customers have purchased their first fashion item since April 2020, a global record second only to South America (+200%, another ‘communitarian’ economic system).

Despite these encouraging figures, many international brands still see ASEAN as a mere satellite to China, its big brother in terms of e-commerce. And they do it for a reason: China’s e-commerce industry is often referred to as the global standard in online fashion, with personal spending rates setting record highs year over year. In one figure, the Chinese luxury online market now accounts for roughly 33% of the global total.

Additionally, Chinese spenders now do not travel to Milan or Paris to get the latest Louis Vuitton or Prada handbag, but they comfortably shop from their sofas in Beijing, Shanghai or in remote cities in Heilongjiang or Sichuan. No wonder why most European fashion houses keep opening offline stores in South East Asia while focusing solely on China’s social commerce, hoping that the strategy will also, somehow in the long term, touch ASEAN online markets.

However, it would be an unforgivable mistake for western brands to lack a dedicated online strategy for south-east Asia, at least in the long term. As for any other Asian region, the key to ASEAN is localization, or the ability to build a dedicated value-adding offer to local populations across a single geographical area.

Let’s take Vietnam: 70% of fashion clothes are bought via Instagram, Facebook or third-party platforms. During the pandemics 22 million new Vietnamese purchased luxury, from 12 to 33 million.

However, brands like Louis Vuitton, Gucci or Balenciaga, though owning large shops In the streets of Hanoi, Kuala Lumpur or Bangkok, miss online websites translated in local languages, and often lack local payment methods options, something extremely important to serve under-banked customers.

Although on paper investments in these functionalities could turn both difficult and complicated to attain, they are necessary conditions to build a dedicated and articulated offer to these countries. For this, one way for brands to reach consumers in a relatively easy way is partnering with local marketplaces, undisputed regional leaders sometimes reaching the sizes of Amazon in Europe or Alibaba in China: They have now built an excellent logistic infrastructure and a pioneering ability to read and process customer data so as to best serve users.

Apart from flagship websites, selling through these giant marketplaces has thus become both necessary and an intelligent strategic step for western brands. Vietnamese, Malaysian and Indonesians all know how to buy on Shopee, while not many realize what ‘piton leather handbags’ means when landing on a fancy, good looking but not Malaysian-speaking western website.

These spenders know that Shopee or Lazada can also find sustainable clothing (over 90% of them have searched for these pieces, and 67% are willing to spend a higher price to have them delivered home). Additionally, these marketplaces are often fully integrated with important social super-apps like Grab, Tokopedia or Gojek.

Last but not least, the massive ASEAN gaming industry is gaining increasing importance globally: The region is home to over 180 million active gamers, typically urban residents (over 80% penetration) who expect playful online purchasing experiences, being fashion or groceries. As in most Asian regions, video games seem to be the next ecommerce battlefield for many western brands.

In November 2021 Project Seed, a virtual gaming blockchain-backed ecosystem (also encountering NFTs features) signed a pioneering partnership with ‘Damn! I Love Indonesia’, a major domestic brand selling Indonesian-lifestyle clothing. Their objective is clear, to mark the birth of fashion Metaverse in Asia.

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Agnese Ranaldi published in Asean, Economy and trade

ASEAN towards the agritech boom with the zeta generation

Agritech is one of the most promising industries in Southeast Asia. 'Generation Z' activism, population growth and climate change call for a regime change for the sector

Southeast Asia is about to become a hub for agritech. The challenges related to anthropogenic climate change and those that followed the Covid-19 pandemic made sustainable crop care even more urgent. In ASEAN countries, the intersection between new technologies and agriculture seems to be the key to reconciling the profitability of the agricultural sector and the promotion of virtuous production practices, in line with environmental protection. In the block of the ten ASEAN economies, these start-ups in the agri-food sector are enjoying great success. These companies provide highly specialized services for the agricultural sector, such as data analysis and the use of artificial intelligence and robotics for the optimization and monitoring of crops. These businesses are enjoying tremendous success in ASEAN, thus also attracting generous funding from venture capital and foreign investors.

Temasek Holdings, for example, launched the Asia Sustainable Foods Platform this week to channel funding into farms that deal with alternative protein production. The Singaporean investor thus aims to "support local and regional businesses in innovation, growth and marketing" of sustainable food products. Vietnam, on the other hand, has a highly inefficient agri-food sector. “Over 50% of the water is wasted due to excessive irrigation”, noted MimosaTek co-founder and strategic director, Nam Dang, “up to 60% of the fertilizer is not absorbed by crops that drain and destroy the 'environment (…) and over 700 million US dollars are lost in export opportunities due to the excessive use of pesticides and chemicals”. According to experts, this is because farmers do not know the size of the demand or the sanitary conditions of the crops. MimosaTek has developed a service that is based on the Internet of Things (IoT), collects data on crops and manages equipment remotely through a simple cloud.

Young people of Gen-Z (generation zeta) are driving the challenge on sustainable nutrition, even in Southeast Asia. It is one of the generations most attentive to the social and environmental issues that define our century. According to Christine Gould, founder and CEO of the Thought For Food Foundation (TFF), young people are looking for "new food concepts". "They want food that is accessible”, she said, "but that is produced ethically and in a way that is safe for both consumers and the environment." Gould spoke at the signing of a memorandum of understanding between TFF and the Malaysian Global Innovation and Creativity Center (MaGIC), an agency of the Ministry of Science, Technology and Innovation, and other partners. "It is a celebration of our country's renowned culture of delicious and diverse food and the growing leadership of our region in technological innovation” said a TFF Malaysian member.

Over the next decade, the Asian agri-food industry will undergo several changes. From the growth in demand due to the demographic boom expected for local emerging markets, to the consequences of climate change and environmental degradation. According to The Asia Food Challenge report, Asia will double its total food spending over the next decade, from $4 trillion in 2019 to over $8 trillion by 2030, and by then Asian consumers will spend more than double of what they spend today to consume quality food. Larger, more attentive to environmental issues and richer: the population of Southeast Asia will represent an opportunity for foreign investors looking for a promising sector in the thriving markets of the area. From the conjunction between the oldest industry of all, the agri-food industry, and the most avant-garde realities of the tech scene, new economic opportunities will emerge for the ASEAN countries. And it cannot be otherwise: a 'zeta generation' attentive to socio-environmental issues, the population boom expected by 2030 and the urgencies linked to climate change will be the vectors of this incipient development.

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Sabrina Moles published in Asean, Politics and strategy

Covid: Asia and Europe in the third pandemic year

If there is a lesson we have learned in the last two years it is that Sars-Cov-2 has no borders, nationality or political color. But not the governments trying to contain it. An overview of how the two regions are dealing with the virus today

One problem, but many different measures. A "zero-case" strategy and dozens of nuances of "living with the virus". As many, how different are the protocols, procedures, bureaucracy, and the mobilization of human resources in the fight against Covid-19. Almost two years have passed since the official alarm of the World Health Organization (WHO), Wednesday 11 March 2020, and now the world is preparing to enter the third pandemic year. At that time, the responses of governments had already taken different paths, as were the socio-economic effects caused by national strategies. The complexity of the issue soon lowered the immune defenses of the relationships that kept the social, economic, health and political structures of all countries in the world running. And the emergence of new variants continues to require constant adjustment of virus containment strategies. What is happening between two similar but equally different universes like the European and the Asian one?

Data

According to data from the Johns Hopkins Institute, Covid-19 caused the deaths of over five and a half million people worldwide during the month of January. Of the more than 350 million registered cases, most seem to gather around the European and North American region, with the case of India raising the regional average for Asia. It should be noted, however, that in the Asian area the confirmed cases of Covid-19 would be far lower than the official figures. The OCTA research team in January made an estimate of Covid-19 cases in Manila to be 6-15 times higher than what was reported by the authorities. Another known example is that of India, where the real cases of the second wave (spring 2021) would have been fifteen times greater than the official data, thanks to the size of the population and the territory combined with the lack of adequate tracking and treatment services.

Strategies

China is today the only major country to pursue the "zero cases" strategy: a challenge made even more complex by the coincidence of holidays for the Lunar New Year (1-11 February), Beijing Winter Olympics (4-20 February) and the arrival of the Omicron variant (recorded January 14 in Tianjin, about 100 km east of Beijing). The protocols are virtually unchanged since 2020: a single case of local transmission is sufficient to activate the local emergency mechanism, which includes mass tests, movement restrictions and localized lockdowns until the authorities deem it appropriate. To support this strategy, the tracking system validated by a personal QR code remains valid, which can signal the person's belonging to a risk area and hinder movement or access to "at risk" places such as railway stations. In some cities the authorities have asked citizens to stay at home during the Lunar New Year holidays (the period that records the record for the "greatest human migration" in the world), while in others preventive mass screening has been carried out.

This does not mean that the Chinese population is peacefully experiencing these restrictions. Even the People's Daily (renmin ribao) now seems to have an ambivalent approach, more careful to defuse the sentiment of the population. The finger remains pointed above all against local authorities and "imported" infections: no longer just the cold chain and the virus that travels on frozen products, but also postal parcels or pets.

The rest of the Asian countries have come close to measures of coexistence with the virus similar to those in Europe, but in many countries there is a certain attention to daily prevention strategies: masks, hand cleaning and self-isolation. Not for nothing had 2020 been the year of "virtuous Asia", which had been able to contain the virus due to a response mechanism already trained by SARS in 2003, by the H1N1 flu in 2009 and by MERS in 2015. The rules were somehow clear, and the health authorities already prepared for the state of epidemic emergency. This does not exclude that Sars-Cov-2 has put even the most prepared countries in difficulty, especially with the persistence of new, more contagious variants.

For this reason, entry restrictions remain valid throughout Asia, which in most cases are reserved for family reunification or for work reasons. All arrivals from abroad are usually subject to a quarantine that can last from two weeks to a few days, again depending on local policy. Those most penalized by the movement block have reduced the control measures in different ways: in some cases, the guarantee is a complete vaccination cycle, in others the low rate of contagion of the country of origin - in some cases eliminating the quarantine as happens in so-called "travel bubbles". In some cases, a QR code confirms the immunity of the subject and allows access to some places. All strategies that European countries have also implemented with the aim of facilitating travel in the Schengen area, even if the arrival of the Omicron variant is - once again - dividing governments on whether to reintroduce quarantine to the vaccinated subjects.

Vaccines

Vaccinating citizens has become a priority to attempt a less sacrificing solution to economic and political interests in most countries in the world. Antiviral pills for emergency use are also starting to be approved in Southeast Asia, while in others the production of these drugs has begun locally: one of the latest cases concerns Laos, which has obtained the license for produce Molacovir.

While the European Union pushed to vaccinate as many individuals as possible, the Asian continent also tried to shift attention from lockdowns to inoculations of anti-Covid doses. This happened (and is happening) at a slower rate. Let's take two of the nations with the highest rate of infections in their respective region. Since the start of the pandemic, France has recorded over 15 million cases and over 125,400 deaths out of 65,449,748 million inhabitants, while 74.7% of the population has completed the vaccination cycle. Indonesia has reported over 4 million cases, but 144.20 deaths out of a population of over 278 million inhabitants, of which 44.3% are vaccinated with two doses. Here the vaccination campaign was mainly supported by Chinese serums, while another part of the supplies comes from the COVAX global distribution mechanism. After the obstacle of "national" accessibility in the global distribution of vaccines, the variable of "local" distribution capacity remains. The example of Indonesia is also useful in explaining how complex it is to organize a vaccine distribution strategy at the local level that considers the actual human resources deployed in the field. A problem that also belongs to the rural areas of mainland China, but where there is a greater capacity to mobilize resources, albeit with its defects that vary case by case: this is what happened in Xi'An, where the "disorderly" management of emergency prompted Beijing to punish the figures responsible for the virus containment strategy. Japan and South Korea have also been able to obtain positive results from vaccination campaigns, but another problem is not completely excluded: the refusal of the vaccine. Although Eastern Europe has one of the highest rates of rejection of the anti-Covid vaccine, pockets of resistance to health policies have also been registered in Asia. In the Philippines, President Rodrigo Duterte threatened to "hunt down" the unvaccinated, while in Myanmar the refusal of the vaccine has become a form of passive resistance to the regime and a protest in China (accused of supporting the military and main junta vaccine provider in the area).

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Michelle Cabula published in Asean, Culture and society

The metaverse proliferates in ASEAN: the role of Generation Z

Digital transformation has affected the daily lives of the inhabitants of the Southeast Asian region. There users, content creators, investors, businesses and celebrities find themselves incredibly close, sharing the same virtual spaces. Fundamental is the role of Generation Z in exploring and spreading new ways of interaction that combine business, entertainment and the promotion of inclusive values..

The metaverse is undoubtedly one of the hottest topics of the moment. The idea of a parallel digital world almost indistinguishable from reality and inhabited by avatar had already been glimpsed by Neal Stephenson in the then futuristic science fiction novel Snow Crash, published in 1992. The recent announcement by Mark Zuckerberg of the rebranding of Facebook was enough to highlight that more than a business strategy, the desire to bet on virtual and augmented reality reflects a trend that has started and is already growing. According to estimates by Bloomberg Intelligence, it is a market that is set to reach a value of 800 billion dollars by 2024.

Seeing this potential, several companies in the ASEAN area are committed to adapting to the metaverse, offering a virtual alternative of typically physical services and experiences. The project "Metaverse Thailand" promoted by A-Plus is one of many examples: the fintech company in Singapore has launched a platform operating on the young blockchain Binance Smart Chain (BSC) where you can choose land from a real map of the Ekamai area of Bangkok, purchase it and use it to develop virtual properties.

But ASEAN offers a particularly fertile ground for the development of immersive technologies not only because of the huge investments, but also thanks to the high rate of Internet penetration and the generally positive propensity of Z Generation towards digitization and progressive virtualization of their real lives. A study conducted by Milieu Insight among 6000 participants from six countries (Singapore, Malaysia, Thailand, Indonesia, Philippines and Vietnam) shows that a largely positive perception of the trend prevails in the Southeast Asian region: interest and enthusiasm are among the emotions most associated with the metaverse. Among the reasons, most respondents stressed that it represents an "advancement in human social interaction" and that it "facilitates more efficient social opportunities".

Some of the phenomena that are emerging recently in the rest of the world are already established practices in the region of South-East Asia. Here digital natives interact daily with their virtual idols, monetize time spent playing online and socialize in virtual worlds through increasingly customizable 3D avatars. The South Korean Zepeto, the most popular platform of the moment in Asia, attracts 2 million active users a day interested in buying (virtual) high fashion clothing to beautify the digital version of themselves and to make friends online.

According to fans, the platform allows to meet people from all over the world and realize desires that could not easily be satisfied in the real world, such as buying luxury goods and taking selfies with your favorite K-pop star. "There are clothes that I cannot afford to wear in real life but in the digital world, I can buy all of them", explained Monica Louise, a 28-year-old Filipino user known as Monica Quin and famous for the videos and creative contents she makes with her Zepeto avatars. Thanks to her activities on the platform, Monica has actually become a virtual influencer with a six-figure salary.

But the metaverse is more of an alternative market in which to try to chase stratospheric gains or a window in which to show off virtually fashionable clothes and extravagant purchases. The Generation Z, which represents the largest group of Internet users in Asia, takes advantage of its long online presence and its familiarity with digital technologies to transform the virtual universe into a space of assertion of real instances.

Emblematic in this sense is the example of Bangkok Naughty Boo, the first cyber influencer of this type, who self-declares himself eternal seventeen years old, not binary and with the dream of becoming a pop star. His figure "also encloses important social messages such as the desire to build a future without gender distinctions, and offers a more modern and progressive image of the Thai capital," noted Roberta Maddalena for Forbes. As explained by marketing expert Nick Baklanov at the AFP agency in Bangkok, the number of virtual influencers has more than tripled, reaching 130 in just two years, showing how Asia is going to be confirmed as the privileged place for the development of the virtual idol sector and, more generally, of metaverse technologies.

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Anna Affranio published in Asean, Economy and trade

Is the Asian continent on track for demographic decline?

Falling birthrates and an aging population are not just Chinese problems: the slow demographic transformation is changing the shape of Southeast Asia.

Asia, historically the most populous continent in the world, is going through an unprecedented demographic transition. In fact, the population growth rate is declining for most countries, and policies to boost fertility do not seem to be succeeding. Asians are aging, living longer and tending to move from the metropolis to secondary cities, while a social change is underway that sees women working more and bearing fewer children.

The most striking case is that of China, where population growth continues to slow and the "demographic window" - precisely the phase that had helped China create the conditions for the unprecedented economic growth we have witnessed in recent years - is closing.

China in 2016 relaxed the "one-child policy" adopted in 1980 by Deng Xiaoping, one of the strictest family planning measures in history, allowing couples to have two or in some cases three children. But the reform, despite a slight increase in the two years immediately following, failed to reverse the downward trend in the country's birth rate, as confirmed by the census carried out at the end of 2020. The causes are probably to be found in the increase in the cost of living, but also in the level of education of women, who are now more attentive to family planning and tend to prefer a career outside the home.

However, Beijing is not alone in witnessing this demographic trajectory: in most East Asian countries, even without fertility control policies like China's, the fertility rate is getting lower and lower. South Korea's population, for example, declined for the first time in 2020, with the number of births dropping by 10% compared to the previous year, and in parallel, the composition of households is also gradually shrinking, with single-person households becoming increasingly common, already accounting for almost 33% of the total in South Korea.

Southeast Asia is no exception, with a population growth rate halved from 1990 (2%) to 2020 (1%) and many countries including Brunei, Thailand, Singapore, Malaysia and Vietnam with a fertility rate below replacement level. However, the decline affects the entire region, with exceptions of a predominantly cultural or religious nature within countries (for example, ethnic Malaysian families in Malaysia continue to be larger because their culture favors larger families and communities, just as in the Philippines the birth rate is higher due to less widespread use of contraceptives for religious reasons).

Contributing to this downward trend may have been the adoption of family planning programs to curb the population explosion of the 1970s and the increasing number of women deciding to study and enter the workforce. There is also a clear correlation between low birth rates and income levels. Due to the high economic growth that has affected these countries since the 1960s, per capita income has risen, changing lifestyles and lifestyle choices, making it increasingly common to choose to remain single and marry at an older age, thus leading to lower birth rates.

Overall, much of Asia is also aging - and fast, especially thanks to better eating habits, advances in disease prevention and sanitation, improved health facilities and services, and services such as health insurance. By 2050, an estimated 21.1 percent of Southeast Asia's population will be 60 years old or older, creating a major problem for the pension system that will likely also cause an overhaul of social security systems. However, the transition from an "aging society" (i.e. with a proportion of elderly people, considered to be people aged 65 years or older, between 7-14% ) to a so-called "elderly" society (i.e. with a proportion of elderly people between 14-21%) will be very rapid: it is estimated that it will take only 22 years in Thailand and 19 in Vietnam, which means that Thailand will become an "elderly" society in 2024 and Vietnam will be in 2039. A very low number, if we think that in Sweden and France it took 85 years and 115 years respectively.

To slow down this process, some Southeast Asian countries are beginning to implement birth incentive policies, ranging from the right to parental leave to subsidies for assisted reproduction. However, not all governments can afford these policies, which are more often than not overly burdensome to government budgets.

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Emilia Leban published in Asean, Culture and society

ASEAN candidates for the 2034 World Cup

According to Gianni Infantino, FIFA president, ASEAN has the economic and football skills to host the highest international competition

ASEAN could host the World Cup in 2034. FIFA President Gianni Infantino talked about this possibility after visiting the Jalan Besar stadium in Singapore, on the occasion of the inauguration of the new headquarters of the Football Association of the island and the new turf of the stadium, to which FIFA contributed with 2.53 million dollars. "Hosting the World Cup is a great ambition - said Infantino - This part of the world certainly has the economic and football capacity to do so". To convince him would have been "the great passion for football" that nourishes the inhabitants of this region, as well as, of course, the growing economy. Indonesia, then, will host the Under 20 World Cup in 2023, and this "will be a test" to prove the capabilities of ASEAN. Infantino therefore welcomed Singapore's decision to run as host of the 2034 World Cup, adding that the country can count on "a very ambitious federation and a government that supports the project".

"It is FIFA's responsibility to try to reduce the gap between nations - recalled the president of the association - by increasing the opportunities for countries of lesser footballing relevance, such as those of ASEAN, to join the more established ones". It is no coincidence, in fact, that since its appointment in 2016, FIFA has increased the number of teams participating in the World Cup, from 32 to 48 starting from the 2026 edition. Infantino ha also suggested to increase the attendance of the World Cup, abandoning the four-year format, to hold them every two years. A proposal that has aroused considerable criticism, especially from the federations of the European Union and United States. But even this would be a way to make the competition more inclusive, allowing potential new hosts, such as ASEAN, to enter the circuit more easily. Infantino also vowed to ensure that the bidding process to host the World Cup, which has been swamped with corruption allegations in previous editions, will be made "as transparent and professional as possible."

From now until 2034, ASEAN will have a goal, added Infantino: “To make football grow”. In fact, a discussion is underway between FIFA and the ASEAN Football Association on the possibility of including the Suzuki Cup, which brings together the national teams of the area, among the official FIFA tournaments. The tournament is currently only accredited by FIFA, but is not supervised by the latter nor played in an international window. This implies that football clubs are not obliged to release their players to participate in it. As a result, many of the best ASEAN players based in Europe fail to take part in the tournament. Certainly the candidacy to host the 2034 World Cup passes through the development of a joint offer by the members of ASEAN. A need that Thai Prime Minister Prayut Chan-o-cha pointed out during the 34th summit of the block held in Bangkok, calling on “all the peoples of ASEAN to collectively support the national football federations of the member states, in order to realize this dream together ".

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Pierfrancesco Mattiolo published in Asean, Economy and trade

Asian countries' role in the 'democratic' supply chains promoted by the US

As the tension between the two great Pacific powers - the US and China - escalates, the value chains of the globalised economy look increasingly fragile and the economic interdependence between the two rivals more cumbersome. Washington needs its Asian allies to create more resilient and 'democratic' supply chains. But with what effects on the region?

The most concerned observers are already calling it a 'new cold war'. Indeed, the trade war waged between the United States and China is becoming increasingly entangled. If a few years ago the tensions between the two countries appeared to be linked almost exclusively to the impact of Beijing’s exports on the American economy, the narrative of this confrontation has recently taken on more heated tones. The competition no longer seems to be just between two economic models, but between two opposite political systems. Are we really facing a second cold war? Even accepting this interpretation, it is not being fought with the weapons of the first one. In the globalised world, the battleground for superpowers is global supply and value chains. Influence over third countries is exercised through investment in infrastructure and the development of new trade partnerships. After all, the ideological clash is still primarily an economic confrontation, even if it is narrated differently. 

In recent years, consumers - and their governments - have realised how fragile global supply chains are. An emblematic case is the superconductors shortage. Chips are essential components for many sectors and a strategic asset in the digital age. Asian countries host most of their production. The issue is so serious that it has become political. In their policies, the United States and the European Union do not want to limit themselves to strengthening supply chains: they intend to assert their digital sovereignty by moving part of the chip production into their own territory. While Brussels maintains a conciliatory stance with Beijing, Washington is determined to promote 'democratic' supply chains. In concrete terms, depending less on China and relying more on partners who share the same political model. For the Biden administration, a renewed 'alliance of democracies' is essential to achieve its foreign policy goals.

But who are the 'democratic' partners to work with? Early this year, British PM Boris Johnson proposed transforming the G7 Summit he was chairing into a D10, the summit of the world's ten leading democracies, inviting India, South Korea and Australia - three Asia-Pacific countries. The guest list was much longer for the Summit for Democracy organised by the White House between 8 and 10 December. These exercises always present the same problem to those who organise them: a country that is formally free and democratic is not always so in substance. The choice of who to admit to the club or not could raise some doubts. Moreover, as already mentioned, EU countries are trying to smooth relations with Beijing and want to avoid initiatives that could be perceived as 'anti-Chinese alliances'.

Returning to the semiconductor issue, Washington intends to reorganise its supply chains by relying more on democratic partners in East Asia. Some of them are already playing an important role in the sector - such as Korea, Japan and Taiwan, key partners in achieving the goals of President Biden's executive order on supply chains -, some others are emerging players, such as ASEAN countries - the US intend to invest significant resources to strengthen cooperation with the bloc. Malaysia is a major chip producer and has been invited to the Summit for Democracy. Indonesia is recognised by its partners as one of the largest democracies and economies in the world and has the potential to become more involved in global value chains. However, there are risks in creating a 'club of democracies'. Some ASEAN countries may not appreciate being left out. This is the case of Singapore, excluded from the Washington summit, and a strategic entrepot in the global chip market.

The US want to work with its allies to reduce dependence on Chinese products not only in semiconductors. Rare earth ores, high-capacity batteries, medical and military supplies. Many sectors will gradually be affected by the new American doctrine. Another area of confrontation with Beijing is infrastructure investments in third countries. The Belt and Road Initiative (BRI) is one of the flagships of Chinese foreign policy and a formidable instrument of influence. The US and EU have proposed their alternatives, the Build Back Better World (B3W) Initiative and the Global Gateway strategy respectively. The two new investment plans will certainly have among their beneficiaries the Asian countries most in need of infrastructure, the lack of which represents one of the main bottlenecks for their economic development. For Washington, China's presence in infrastructure networks must be kept under control not only abroad, but also within its own borders, as we have seen with the exclusion of Huawei from the development of the 5G network.

Will Washington be able to reshape global supply chains in a more resilient and 'democratic' fashion? US policy will undoubtedly favour their Asian allies' companies, which will export more goods to the US market, replacing their Chinese competitors. At the same time, it remains uncertain to assess the consequences of this strategy in other markets. Will other democracies actually reduce their dependence on Chinese goods? Not all of Washington's partners share the hard-line with Beijing - Europe, for example - and Asian countries may find it difficult and burdensome to reduce their trade ties with their neighbour. In this case, they might not be so keen on following the American leadership.

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Michelle Cabula published in Asean, Culture and society

The bet of decentralized finance in Southeast Asia: a "child’s play"?

Digital transformation is revolutionizing the world of finance and opening up new opportunities for profit. In the context of ASEAN, investing becomes a particularly easy and entertaining operation within everyone’s reach, given also the widespread familiarity with the world of video games and technological tools.

In Southeast Asia, the spread of cryptocurrencies grows in tandem with the ludicization of trading platforms. The meeting of these two trends gives rise to decentralized finance platforms (DeFi) that manage to transform the "cold, boring financial activities into fun, communal adventures that resemble the gaming experiences that young Asian investors are familiar with”

The synergy between the gaming industry and the world of digital finance has so far been particularly successful in Asia, given the centrality that both sectors cover in the economy of the continent. Thanks to the decentralization and transparency typical of blockchain technology, crypto-finance is presented to younger investors as a more equitable and accessible alternative than traditional finance. In addition, often the platforms are designed to make trading more and more similar to a video game, which lets glimpse the possibility of getting rich with simple and fun operations.

Axie Infinity, developed by the Vietnamese studio Sky Mavis, is among the most popular play-to-earn games: during the past summer, the historical volume of transactions exceeded the billion dollars, while the platform reached the share of a million active users per day (DAU). The ecosystem, which relies on Ethereum’s blockchain technology and is based on non-fungible tokens (NFTs), involves players in mining activities, essentially offering the ability to convert the accumulated virtual currency into real earnings.

These features have made Axie Infinity attractive not only to young digital natives, but also to precarious workers, for which the mining operations therefore become not only a profitable pastime but also a real profitable activity that guarantees a certain economic stability. Just think that for a citizen of the Philippines daily spend a minimum of two hours to develop and support the virtual economy of the game can have a significant impact on real life, reaching almost twice as much as an average monthly salary. Lily Z. King, CEO of Cobo, crypto asset management commpany and custodian platform based in Singapore, noted that "for its 2 million users, the game has already become a workplace, a bank and a stock market".

Indonesia is another ASEAN country where part of the population relies on the gamified DeFi to cover daily expenses. Of the million users who benefit from the digital entertainment and asset services offered by Singaporean Digital Entertainment Asset, about half are Indonesian, as the cryptocurrencies earned during the online gaming sessions are easily convertible into the local currency, passing through exchange as Indodax.

The recent trend towards the gamification of digital finance seems to bring with it a number of advantages, including the inclusion in the financial world of ever wider and more diverse sectors of society. However, some observers point to the potential risks of a system that relies on emotional involvement and whose playful dimension can easily lead to dependency, especially for younger and inexperienced people. The simplification and open-source nature of blockchain technologies does not prevent users from incurring serious losses resulting from the risks typical of the sector, such as extreme volatility and the danger of speculative bubbles, while high yields are not accompanied by guarantees such as those offered by banks and traditional investment accounts.

For these reasons, authorities must invest in financial education, ensuring that the population is provided with the tools and knowledge to prevent the attempt to keep up with digital transformation and technological innovation from becoming a dangerous game. In April, a group of Australian and Southeast Asian blockchain associations signed a Memorandum of Understanding establishing the Asean Blockchain Consortium (ABC), the first collaboration between actors in the sector to promote training on the subject, as well as proposing cross-border collaborations and with regulators to ensure legal compliance of regulations and encourage the adoption of technology.

Blockchain technology and crypto-asset markets are starting to revolutionize the paradigms of the industry, making finance more engaging and inclusive. As Chia Hock Lai, co-president of the Blockchain Association Singapore (BAS), pointed out at the signing of the agreement, all the actors involved have the task of "support the growth of the industry in a healthy and sustainable pace, while providing ample room for innovation".

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Carola Frattini published in Asean, Politics and strategy

Russia’s interests in ASEAN countries

Russia is paying more and more attention to South-East Asia, intensifying cooperation with ASEAN countries in diverse fields.

Russia and ASEAN countries have conducted their first naval exercise from the 2nd to the 4th of December 2021, in Indonesian waters, along the Strait of Malacca, one of the most important maritime routes in the world. For the exercise, Indonesia, Thailand, Singapore, Vietnam, Malaysia, Myanmar and Brunei deployed their warships and military aircrafts, while the Philippines participated as a virtual observer. This is the first joint exercise between ASEAN countries and Russia. On the other hand, individual states such as Indonesia in 2020 and Laos in 2019 have already completed military exercises with Moscow. Indeed, Russia and some ASEAN countries seem to have a strong link in the field of defence and security. Based on data for the period 1999 to 2019, Moscow is the first arms exporter to Southeast Asian countries. According to a report by the Stockholm International Peace Research Institute, 26% of all arms imported in ASEAN countries are supplied by Russia, while 20% by the United States.

In general, it should be highlighted that it is convenient for ASEAN countries to have a broad portfolio of suppliers in order to both strengthen their policy of non-alignment and avoid having a bad relationship with other supplier states. Connie Rahakundini Bakrie, an Indonesian military analyst from the Institute of Defence and Security Studies, described the joint exercise between Moscow and the countries of the Association of Southeast Asian Nations as a further sign of non-alignment of the ASEAN bloc. Indeed, over the years these states have sought to build a policy that would let them avoid taking sides between China, to which they are linked by close economic ties, and the United States, that are definitely a guarantee against any possible dispute given by the growing power of Beijing. With the exception of Laos, Cambodia and Myanmar, which are much more linked to China, the other ASEAN countries are building strong ties with Western countries.

The foreign policy of the ASEAN countries seems to be convenient also to Russia, which is paying more and more attention to South-East Asia. This bond is also proved by the upgrade of the relationship between Moscow and the ASEAN countries to a "strategic partnership" in 2018. In addition, the fourth ASEAN-Russia Summit was held in video conference on October 28th to celebrate the 30th anniversary of the relations between Moscow and ASEAN countries. This summit has also produced a Comprehensive Plan of Action to implement their strategic partnership. As stated by Richard Heydarian, Professor of History and Political Science at the Polytechnic University of the Philippines, Russia most likely sees South-East Asia as a strategic territory to promote a multipolar order and not a uni or bi-polar global order. Moscow certainly wants to undermine the global status enjoyed by the United States, but this does not imply that Russia wants to permit China to expand its control to regions that declare themselves as non-aligned, such as South-East Asia.

Vietnam is definitely the ASEAN state to which the Russian Federation is most closely linked. The friendship between the two countries has been also demonstrated by the visit of Vietnam President Nguyễn Xuân Phúc to Russia from November 29th to the 2nd of December 2021. The leaders of the two countries during this visit have produced a joint statement on their global strategic partnership and have also expressed their desire to both increase their cooperation on security and defence and to strengthen their trade and investment ties. The link between Hanoi and Moscow derives mainly from the similar political views of the two countries during the period of the Cold War. Vietnam is of strategic importance to Russia as it serves as a bridge between Moscow and the ASEAN bloc. On the other hand, Vietnam probably hopes that Russia will stem China’s claims in the South China Sea. However, it is unlikely that Moscow would sacrifice its relations with China for Vietnam.

Richard Heydarian also makes a very interesting point about the connection between Russia and ASEAN countries. Moscow, in fact, has another source of attraction for these countries: ideology. The politics that Putin represents is actually very attractive to some South-East Asian leaders who do not fully recognize themselves in the democratic systems of the United States and the European Union. Putin’s authoritarian, nationalist and populist policy seems to exert a particular soft power over some members of ASEAN. Finally, Russia has also applied the so-called vaccine diplomacy in many countries belonging to ASEAN. ASEAN countries, in fact, have greatly appreciated the intervention of Russia in response to the COVID-19 pandemic, also through the distribution of the vaccine "Sputnik V" in the area and the training of health experts.  

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Sabrina Moles published in Asean, Politics and strategy

RCEP, the agreement that promises Asian integration is underway

On January 1, 2022, the Regional Comprehensive Economic Partnership (RCEP) will officially enter into force, an agreement that comes with great expectations about the Asian integration process. An overview

The Regional Comprehensive Economic Partnership (RCEP) will enter into force by January 1st, 2022. It is the largest trade agreement in history outside the World Trade Organization (WTO), involving 16 countries of the Asian region. At the time of the official launch, however, 10 nations will be involved in the new measures, while 5 have yet to ratify the agreement within their own legislative mechanisms. From January 6 ASEAN nations will be included in the RCEP: Singapore, Brunei, Thailand, Laos, Cambodia, and Vietnam. Together with them enter China, Japan, New Zealand, and Australia. Finally, for South Korea, it will be necessary to wait for the plenary session of the National Assembly to formalize the entry into the agreement.

Many words have already been spent on the potential of the RCEP, as much as the expectations are high. A treaty of this magnitude will only accelerate the economic integration of the region, bringing together very different economic, political, and social realities. The RCEP will cover a market of 2.3 billion people, with a value of production that exceeds 26 trillion dollars: this is about 30% of the world population and over a quarter of the exports existing on global markets.

The main points

The RCEP aims to break down tariff barriers by up to 90% between member countries over 20 years. For China and ASEAN countries it will mean a strengthening of the Free Trade Agreement (FTA) already in force, reducing 70% tariffs on goods imported from Southeast Asia, while Brunei, Singapore, Thailand and Vietnam will eliminate around 75% of tariffs on products imported from China. All correlated with an effort to simplify and accelerate administrative practices related to commercial exchanges between RCEP countries. This step will focus on the growth of digital skills in the countries involved, but also on the harmonization of data, documents and communications.

The second most important aspect of the regional agreement concerns the abatement of the so-called non-tariff measures (NTM), or all those restrictions on imports linked - for example - to the quality and safety standards of a particular industry. This is an important point, which together with the transparency constraint facilitates international transactions along the supply chain. One example is Vietnam, which imports a significant portion of high-tech components from China and South Korea: these types of deals are continually subject to compliance procedures that drive up the prices of both materials and final output, while the absence of uniform standards hinders the introduction of the product on international markets. Costs that are anything but negligible, as they require a very in-depth and updated analysis of the regulatory requirements of the business partner, and the adoption of new certified tools and skills. With the arrival of the RCEP, this process is adopted in a single solution at the national level, with the competent authorities who have worked to apply the measures necessary to standardize national regulations with those provided for in the agreement.

Digital integration is one of the most innovative steps of the agreement in the FTA panorama. The acceding countries promise to create more opportunities for small and medium-sized enterprises in the e-commerce sector, as well as providing them with more digital skills to facilitate trade on the international market. According to a 2021 survey by the World Economic Forum, 87% of ASEAN SME executives count on digitization as an important tool to overcome the economic crisis. In the plans of the RCEP, this evolution will have to pass through new channels, where monetary transactions and the exchange of documents and administrative deeds will have to take place. Hence the opportunity to exchange technologies and useful expertise more easily: companies in Singapore, a country that excels in the global digital skills index (DSGI) (with a score of 7.8), can contribute to the technological development of partners far from the soft and hard technological upgrade (like Cambodia, which has only 2.8 of DSGI).

What to expect 

The RCEP was launched in a difficult historical moment, where economic development must deal with the waves of Covid infections. Any large-scale economic integration process takes several years before showing the first concrete results. The agreement offers the most advanced countries the opportunity to reduce costs along the supply chain, while it allows developing countries to more easily import some sophisticated technologies and know-how. Both Asian investors and foreign companies entering the RCEP market could see the range of growth opportunities widened, both in terms of purchases and sales of goods and services.

The promises of the agreement are commercial integration, tariff rationalization, economic liberalization, revitalization of SMEs, market accessibility and mutual benefit between equals. This does not completely eliminate the risk that some countries may take advantage of the agreement to enter the gray areas of national regulations, especially where protection for SMEs is lacking. The time for disquisitions has come to an end for (almost) all countries: it will be the actions of the next few years that will demonstrate the potential of the RCEP both for private individuals and for international cooperation.

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Clara Lomonaco published in Asean, Economy and trade

What will be the future of the ASEAN economy in 2022?

In the years preceding the Covid-19 pandemic, ASEAN countries competed to become the fourth world economy power within 2030, but several lockdowns, waves and millions of infections have put on stand-by this major goal..

For millennia, Asia has amazed and surprised the West with new discoveries and great steps forward in technologies and economic fields. In this precise historical moment, expectations that the whole world, but first and foremost the various ASEAN countries, place on the Asian rebirth are delaying being actualized but this doesn’t mean that they will not materialize. According to data processed by Oxford Economic, the prolong of the pandemic is only delaying the restart of ASEAN countries. In the first trimester of 2021, Indonesia, Thailand and the Philippines, the three majors Southeast Asian economies, have found themselves obliged to actualize several measures of containment to cope with new waves of infections, respectively registering a contraction of 0.7%, 2.6% and 4.2% of GDP compared to the same period of 2020. Therefore, if analysts have revised downward the block’s growth previsions for the current year, from 5.5% to 4.9%, positive signals that arrive from global trade and the gradual return of investments suggest an even stronger recovery in 2020 (+6.5%).

For the most part of ASEAN countries, the second semester of 2020 was the first period in which the influence of the pandemic has made itself felt. For this reason, it will be easier for regional economies to register an annual growth in the ongoing trimester. However, the future is still wrapped in uncertainty due to the recent worsening of the virus throughout the region. Restrictions have slowed private consumption expenditure, which fell 0.5% year-over-year in the first quarter, outpacing the 0.9% growth registered in the fourth quarter of 2020.

The progress of vaccination programs in every country will have an impact on people’s expenditure. On May 5th of this year, the Bank of Thailand made economic projections based on certain scenarios: whether 100 million doses of vaccination will be distributed by the end of 2021 to achieve herd immunity by the first quarter of 2022, the economy will grow 2.0% in 2021 and 4.7% in 2022. A delay in achieving herd immunity until the third quarter of 2022 would reduce economic growth in the region to 1.5% in 2021 and 2.8% in 2022. If it takes until the last quarter of 2022, the economy will only grow 1.0% and 1.1%, according to the bank’s projections.

During the first trimester, Thailand was hit by the second and the third wave of the virus. The second one, that developed in half December and lasted until the beginning of February, brought to shorter opening times, and the closure of activities such as coffee shops, pubs with karaoke and massage parlors in the metropolitan area of Bangkok. After protests of the catering sector, the government began to allow the access to food services also in the most hit provinces. Nevertheless, entrances of restaurants remained low, as seating capacity was limited to 25%. Restrictions slowed private consumption expenditure, which fell 0.5% year-over-year in the first quarter, outpacing the 0.9% growth registered in the fourth quarter of 2020. The lack of tourists has not helped the economy. Although the Thai government is keen to open the country given its dependence on tourism, waves of viruses have disrupted visitor flows. Exports of services, which include spending by non-residents such as tourists, declined 63.5% in the three months ended March. Merchandise exports grew for the first time in four quarters, posting a 3.2% increase.

Malaysia was on track to satisfy official previsions of growth of 6% to 7.5% until the coronavirus pandemic struck in March 2020. Nevertheless, the country has continued to work to achieve the predicted growth in Gross Domestic Product (GDP) between 6.0% and 7.5% in 2021. The Malaysian government’s future strategy includes a greater focus on the economic sectors most affected by the coronavirus pandemic such as tourism and retail. Kuala Lumpur will wait for the recovery to take hold before considering any new taxes. Since the objective is to relaunch the economy, this will only be possible through a balance between short-term fiscal injection and the fiscal consolidation of medium and long-term.

In the Philippines, the government spoke of the country’s potential to return to a rapid growth rate, aided by government spending and an eventual end to blockades. GDP fell 4.2% in the March quarter compared to a year earlier. The Philippine economy shrank more than expected in the first quarter, although sequential momentum showed that a recovery was underway and suggested that the central bank will keep rates at historic lows. The economy also improved on a sequential basis, with production up 0.3% from the previous three months on seasonally adjustment terms to mark its third consecutive quarter-over-quarter growth. Manila is battling one of Asia's worst coronavirus outbreaks with over one million recorded cases and over 18.000 deaths. A new wave of infections since March has prompted the re-imposition of stricter mobility limits, but the new daily cases are down from the peak.

An example of a successful Covid-19 containment and economic recovery strategy is certainly that of Vietnam. With one of the lowest case rates and deaths in the world, Vietnam’s journey against COVID-19 has stood out in Southeast Asia and around the world. The government has been widely credited with the country’s success in keeping transmission rates of COVID-19 under control due to its rapid decision-making process, effective public health messages and aggressive contact tracing, although not without criticism. But, as in other countries, movement restrictions and social distancing measures to reduce the spread of COVID-19 have affected people’s livelihoods. Some families relied on aid for their basic needs. Others, such as informal workers who were unable to submit documentation to access government aid, relied on charity for assistance. Several Vietnamese social organizations working with disadvantaged rural communities, have provided food parcels and loans to families in Central Vietnam, where livelihoods are secured through agricultural labor. The government allocated IPA 63 trillion, about USD 2.6 billion, for social assistance, but the aid was largely inaccessible to those who lacked legal documentation or worked in the informal sector. There are many communities that have not yet received aid from the government program. The executive narrative does not discriminate, but some of its regulations and conditions inevitably pose obstacles for some members of the population. Therefore, Hanoi will have to work to ensure better social inclusion if it wants to maintain the title of “successful economy” among ASEAN countries.

World Bank estimates

Asia-Pacific’s economic recovery is at risk of a setback due to the spread of the Delta variant of the coronavirus and the protracted stress on businesses and households, which will likely result in a slowdown in economic growth and further increase in inequality. This is the analysis made by the World Bank in its latest update on the regional economy. The Bank noted a slowdown in economic activity beginning in the second quarter of 2021, and consequently revised its growth previsions downward for most economies in the region. While China’s GDP growth prevision is being raised over the April revisions from 8.1 to 8.5%, the rest of the region will grow on average this year by 2.5%, almost two percentage points less than the organization’s previous projection.

Among economies with the most marked reduction in growth previsions are those of Southeast Asia mentioned above: for Thailand, the World Bank now foresees growth of just one percent in 2021, compared to the 3.4% projected in April. Vietnam, where the pandemic has hit the main economic and productive centers hard, sees its GDP growth estimate for the current year fall from 6.6% to 4.8%, and Malaysia is also expecting a similar reduction: from 6 to 3.3%. The adjustment made by the World Bank to previsions for Indonesia is more limited, which could grow by 3.7% this year (in April the estimate was 4.4%).

In conclusion, it can be said that the global economic recovery continues, but with a widening gap between advanced economies and many of the emerging and developing markets. Growth prospects for advanced economies this year improved by half a percentage point, but this is balanced by a downward revision for emerging markets and developing economies, led by a significant downgrade of growth for emerging Asian countries.

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