The COVID-19 crisis sees the world facing the worst downturn since the Great Depression, and challenges the broadly heralded pre-pandemic view that this would be the Asian Century.
The latest IMF forecasts project global growth to contract by an alarming -4.9 per cent in 2020, with all major advanced economies projected to face even worse results than this.
The multiple waves of the pandemic, the synchronised deep global downturn, depressed consumer spending, mobility restrictions and contraction in global trade have had an unprecedented impact on the global economy.
Steven Altman highlights that globally there is likely to be a 13 to32 per cent decline in merchandise trade, a 30 to 40 per cent reduction in foreign direct investment and a 44 to 80 per cent drop in international airline passengers this year.
Australia has experienced significant impacts, most notably on the international education and tourism sectors. Universities Australia forecasts an extraordinary $16 billion hit to Australian universities owing to COVID-19 by 2023, with revenue losses of up to $4.8 billion forecast for 2020.
The tourism sector is also forecast to take a $55 billion hit in 2020 compared to the $138 billion of expenditure in the sector the previous year.
On the other hand, the iron ore sector has seen record levels of demand, strong prices and uninterrupted supply chains. The agriculture sector has also reported minimal impact from COVID-19.
Across 11 commodity categories the Australian Government has so far only reported impacts ontwo categories seafood, and meat and live animals. This is certainly not immaterial. For instance, there is an expected fall of $200 million in seafood export earnings with China in 2019-20 due to COVID-19.
E-commerce has also grown exponentially, with Australia Post reporting an 80 per cent increase in year-on-year sales in the eight weeks after the pandemic was declared by the World Health Organization.
Even in the midst of the pandemic, we are reminded that global economic weight remains firmly balanced towards Asia. China, India and the ASEAN 5 for example are all projected to outperform the global growth rate, with China for instance still expected to grow at one per cent.
The secret to Asia’s success
It is perhaps not surprising that Asia is expected to fare better than other parts of the world.
Over the past decade, consistently cited projections have held that the real GDP of Asian economies are expected to exceed the combined economies of the Americas and Europe by 2030.
Asia is also expected to account for more than 70 per cent of world capital stock by 2030. By as early as this year, Asia’s middle-class consumers were expected to outnumber those in the rest of the world combined.
These macro-level narratives have influenced national, industry and firm-level agendas in Australia and across the world regarding the scale of the opportunity in Asian markets.
Despite the extraordinary levels of growth in Asia, Singapore’s Prime Minister Lee recently observed that “an Asian Century is neither inevitable nor foreordained”.
This assessment is a sobering reminder of the impact of geostrategic tensions between the US and China, and indeed regional tensions, from which Australia is clearly not immune. However it should also be viewed in a relative context.
From an economic perspective, long-term projections remain that Asia will continue to be the growth centre for the global economy and narratives around the scale of opportunity in our region retain their value.
Australia of course remains heavily tied to Asia from a trade and investment perspective. Asia accounts for seven of our top 10 trading partners, and an increasing volume and deal value of inbound investment over the past decade, most notably from China, which still remains behind Japan in its stock of foreign direct investment in Australia.
Levels of Australian investment in Asia are also steadily rising and have grown almost four-fold over the past 10 years to $472 billion in 2019.
In charting our own course for pandemic recovery, Australia will be highly dependent on our partners in the region.
Winning in Asia’s highly competitive markets will be central to sustaining our per capita income levels, adding sustainable jobs to the workforce and growing our long-term pool of national savings.
Realising the opportunity, however, may be more complicated, requiring greater government-to-government engagement, deeper business-to-government engagement and a recognition that economic, defence and strategic national interests will prove increasingly harder to separate.
Read more about this topic in Winning in Asia: creating long-term value a new report from Asialink Business and their project partners
 IMF (2020), World Economic Outlook Update
 Steven A. Altman (2020), Will COVID-19 have a lasting impact on globalisation, Harvard Business Review
 Universities Australia (2020), COVID-19 to cost Universities $16 billion by 2023
 Jared Greenville, Heather McGilvray and Stephanie Black (2020), Australian agricultural trade and the COVID-19 pandemic, Department of Agriculture, Water and the Environment
 Australia Post (2020), Inside Australian Online Shopping: 2020 eCommerce Industry Report
 IMF (2020), World Economic Outlook Update
 Lee Hsien Loong (2020), The Endangered Asian Century: America, China and the Perils of Confrontation, Foreign Affairs
 Department of Foreign Affairs and Trade (2020), Statistics on who invests in Australia
 As above