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In a fascinating address to the packed auditorium in yesterday’s TFWA Asia Pacific Conference, Keyu Jin, Author, Economist and Professor, London School of Economics, shared her perspectives on the region’s economic outlook and navigating the macroeconomic challenges. “The Asian economy is characterised by high resilience and large economic potential” I n the opening session of yesterday’s conference – ‘Asia Pacific: Takes off’ – Keyu Jin, Author, Economist and Professor, London School of Economics, provided sound analyses, sharing her perspectives on the region’s economic outlook and navigating the macroeconomic challenges. “The Asian economy is characterised by high resilience and large economic potential,” Jin explained. “Consumption upgrading, lifestyle consumption is the next big thing, and a new generation of savvy consumers will redefine the economic and political landscape, particularly in China. Even if China slows down, its absolute contribution to the global economy is still enormous.” Asia Pacific is the key engine of global growth, with India, Indonesia and China to be the top three fastest-growing economies in 2024 and 2025. “50% of the global consumer class are in Asia, and half of its population are middle class,” said Jin. “It has become one of the most connected components for the global supply chain and technology network.” Digital connectivity and rapid growth in technology will accelerate trade in goods and services, providing financial inclusion that accelerates growth. “China’s aim to climb up the value chain through smart manufacturing and the triangle of communications, Artificial Intelligence (AI), and data is a full manifestation of the fourth industrial revolution,” Jin commented. “Regional trade will be more important than ever. Businesses will see opportunity in sectors ranging from the digital economy to the green economy, AI, and new consumerism.” Domestic demand can come from consumption and investment. “Emerging Asia has the highest saving potential, which is good, if it is turned into productive investment, and is bad for consumption if there is over-saving,” Jin shared. “There needs to be a balance. India needs to invest in infrastructure, and China needs to redirect investment demand and exports toward domestic consumption. But this confidence in consumption stems from steady wage and income growth, and stability in the macro environment. The new generation loves to spend, and even borrow, to enjoy leisure. The generational shift will reduce the over-saving and over- production pattern observed in China.” Many emerging markets are still mired in debt and have not fully recovered from the pandemic. Geopolitical risks and growing protectionism threaten global economic potential. “Businesses should seek diversification, do their research in understanding the behind the scenes situation in each economy, rather than rely on headline news, which is becoming increasingly biased and unreliable,” said Jin. “On the ground research remains to be the most important and accurate source of information.” Global trade has been remarkably resilient, amid health shocks, technology shocks, and global conflict. Jin added that there are signs of growing protectionism, but it is just a matter of trade taking a longer route and a global reallocation of investment and capital. “Trade reallocation has benefited certain countries like Mexico and Vietnam. Investment reallocation has benefited India, South Korea and Japan. The ineluctable march of globalisation has not been reversed, only slowed down compared to the previous era of hyper-globalisation.” Keyu Jin, Author, Economist and Professor, London School of Economics: “The Asian economy is characterised by high resilience and large economic potential. Consumption upgrading, lifestyle consumption is the next big thing, and a new generation of savvy consumers will redefine the economic and political landscape, particularly in China. Even if China slows down, its absolute contribution to the global economy is still enormous.” Tuesday 14 May 2024 8 T F W A D A I L Y