4 David Skilling is the Founding Director of Landfall Strategy Group, an economic and policy advisory firm that works with governments, firms and financial institutions in Australasia, Asia, the Middle East, and Europe. David has previously worked in various roles in the New Zealand Government, founded an independent economic think tank in New Zealand, and was with the McKinsey Global Institute and McKinsey & Co in Singapore. David holds a Ph.D. in Public Policy and a Master in Public Policy degree from Harvard University, as well as a Master of Commerce degree in Economics from the University of Auckland. David was named as a Young Global Leader by the World Economic Forum in 2008. SUMMER 2022 NO.65 / THOUGHT LEADERSHIP BRIEF The second set of factors relate to a weakening pace of the global recovery. As mentioned above, there was an unexpectedly vigorous economic recovery process across much of the world from mid-late 2020. However, world GDP growth forecasts are now being marked down – due to the prospect of monetary tightening as inflation rates increase, higher energy and commodity prices, supply chain disruptions, and so on. The IMF forecast a slowing in world export growth over the next few years, returning to around pre-COVID levels. This will also be the case for Asian economies. And of course, the Russian invasion of Ukraine – and the accompanying economic sanctions – will reinforce these headwinds to global trade. Overall, the external balance is unlikely to make the same contribution to overall Asian economic performance as has been the case over the past two years. Indeed, the merchandise trade balance across several externally-oriented Asian economies has weakened over the past several months. Additional growth engines will be required, either in the domestic economy – or increasing competitive advantage in external sectors to generate export growth even in a less supportive environment. The final set of reasons for expecting a weakening in Asian export growth relate to the emerging structural challenges to globalisation that may constrain the contribution of externally-oriented growth models for some Asian emerging markets. As discussed in a previous IEMS note, changes to global supply chains, the increased use of technology and reduced labour intensity, may weaken the ability of some Asian economies to rely on eternal sectors for growth.1 Asian economies will need to adapt their growth models in order to continue to perform. CONCLUDING REMARKS Overall, Asian economies have performed particularly well during the COVID – particularly those that have strong export sectors. However, some of these supporting factors are likely to weaken over the coming period – likely leading to a period of weaker economic growth, unless additional domestic growth engines are identified, or competitive advantage is strengthened to support continued export growth even in a weaker global economic context. The external outlook will be more challenging for many Asian economies. 1 David Skilling, ‘Emerging Markets in Asia need to adapt their growth model in a post-COVID world’, IEMS, 2021. Read all HKUST IEMS Thought Leadership Briefs at http://iems.ust.hk/tlb T: (852) 3469 2215 E: iems@ust.hk W: http://iems.ust.hk A: Lo Ka Chung Building, The Hong Kong University of Science and Technology, Clear Water Bay, Kowloon With Support from
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