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Country Forecast Asia

  • ID: 2138537
  • Country Profile
  • June 2021
  • Region: Asia Pacific
  • 31 Pages
  • The Economist Intelligence Unit
Background: Asia and Australasia is an extremely diverse region in terms of culture, economic systems and living standards. It also accounts for more than 50% of the world's population. A number of subregional groups have been formed, most notably the Association of South-East Asian Nations (ASEAN), but rivalries between major regional powers will continue to delay progress on much broader political and economic integration. Asia and Australasia has been the world's fastest-growing region economically for much of the past 25 years. Its share of global GDP (at purchasing power parity exchange rates) has risen from about 20% in the early 1980s to 41.9% in 2020.

Political structure: Asia and Australasia contains several long-established representative democracies, including the world's largest, India. Other countries in the region have struggled to make the transition to full democracy, and some, such as Thailand and Pakistan, have periodically fallen back under the sway of regimes controlled by the military. Many of the remaining authoritarian regimes in Asia, including China and Vietnam, have sought to strengthen and legitimise their grip on power by improving living standards, rather than by relying on repression alone. Minority rights have been challenged in several countries, notably by majoritarian religious movements, posing challenges for the region's nascent democracies.

Policy issues: The Covid-19 pandemic will dominate the policymaking agenda in the early years of The Economist Intelligence Unit's forecast period (2021-25). Governments in Asia will all face challenges in terms of control and containment; this will prove especially difficult for emerging countries with weaker healthcare systems. The crisis is likely to foster greater inwardness in terms of economic policy as countries seek to boost their self-reliance amid restrictions on the global movement of people and capital. Greater protectionism will be one consequence, and this attitude may not begin to shift until later in the forecast period. Even then, many Asian nations may not view exports as a reliable means of driving economic growth, as has been the case in the past. In the longer term, Asian policymakers will be preoccupied with issues relating to the availability and quality of infrastructure. Administrations around the region will also have to contend increasingly with the challenges of climate change and labour-displacing automation and innovation.
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Country Forecast Asia

Fact sheet

Summary
Political stability
Economic outlook
Business environment rankings

Political outlook
A coup in Myanmar has plunged ASEAN into crisis
Pacific regionalism is also being tested
US-China strategic tensions are contributing to regional strains
Mr Biden elevates the stature of the Quad
Tensions in the Taiwan Strait have increased dangerously
The US policy review will open doors to diplomacy, but expectations will be low
Slow Covid-19 vaccination drives have exposed governments to criticism
"Zero Covid" policies have been popular, but will be hard to maintain
A general election in Japan is the highlight of Asia's electoral calendar

Political outlook: Election watch
The coronavirus will change-but not upend-political systems in the region

Economic outlook: International assumptions
Developed economies will be in recovery mode this year
Some regions will take longer to recover than others
The pace of vaccination is the main variable for economic projections
Vaccination timelines in many countries will stretch well into 2022

Economic outlook: Regional economic growth outlook
The economic recovery will be uneven across the region and within economies
Growth momentum in China will gather pace in 2021
India's manufacturing sector will benefit from vaccine drives
South Korea's economy returns to pre-pandemic levels
ASEAN's export-oriented economies will bounce back in 2021

Economic outlook: Inflation

Business environment rankings
Asia and Australasia remains mid-ranked globally owing to disparities
Among Asia's developing countries, Indonesia makes significant progress
Asia scores best for policy towards foreign trade
FDI will still be valued as an important driver of growth

Business environment rankings: Definitions
The subregions
Asia and Australasia
Asia and Australasia (excl Japan)
Australasia
ASEAN
Greater China
South Asia

Data summary: Asia and Australasia

Data summary: Asia and Australasia (excl Japan)

Data summary: Australasia

Data summary: ASEAN

Data summary: Greater China

Data summary: South Asia

Guide to the business rankings model
Outline of the model
Calculating the rankings
Measurement and grading issues

List of indicators in the business rankings model
Political environment
Macroeconomic environment
Market opportunities
Policy towards private enterprise and competition
Policy towards foreign investment
Foreign trade and exchange controls
Taxes
Financing
The labour market
Infrastructure
Technological readiness
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