Key trends to watch in the Year of the Tiger

In 2021, the global economy forged ahead on its path to recovery as waves of coronavirus infections ebbed and flowed. Although the overall outlook is upbeat, a combination of supply-chain issues, high raw material prices and persistent inflation elsewhere are sapping economic momentum and prolonging uncertainty, calling the sustainability of the recovery into question.

A sustained, broad-based global recovery will be measured by our ability to control Covid-19 and our success in laying the foundations for a more resilient, inclusive and green future.

Here are six key trends I’ll be watching out this year:

1. Vaccine equity

Unless every country can obtain vaccines quickly and fairly, a global economic recovery will be difficult. An Economist Intelligence Unit (EIU) report shows that rich countries have administered 100 times’ as many coronavirus vaccines as poor countries. The report predicts that the countries that have not yet vaccinated 60% of their population by mid-2022 will register GDP losses totalling US$2.3 trillion by 2025. We must strengthen global cooperation in vaccine research, production, logistics and intellectual property exemptions, to help low and middle-income countries obtain vaccines and medical supplies.

2.???RCEP boosting APAC trade & investment

The Regional Comprehensive Economic Partnership (RCEP) trade agreement came into effect on 1 January this year, where more than 90% of merchandise trade between approved members will be subject to zero tariffs. Reductions in intra-regional trade costs and product prices will contribute to regional production, supply and consumption chain, encouraging hundreds of billions of dollars of new investment. RCEP will further drive regional efforts on environmental, social and corporate governance (ESG) and sustainable development.

3.???A net-zero emission future

We need to take bolder actions to reduce greenhouse gas emissions or else Asia could face between US$2.8 trillion and US$4.7 trillion in lost annual GDP by 2050 – more than two-thirds of the impact of climate change on global annual GDP. Capital, innovation and commitment to building a low-carbon economy will be huge opportunity for industries such as information technology, biomedicine, new materials and energy to emerge as new sustainable drivers of growth.

If we connect funds to green projects, we need to create a widely agreed definition of what constitutes a sustainable project or bond, with definitions and ratings of environmental risk.?

4.???Digitalisation and the metaverse

The digital transformation will continue to drive the rapid integration of industry and technology and support international trade by reducing transaction costs, facilitating global value chains, and improving market access. Central bank digital currencies (CBDC) can cut transaction costs and spur trade. According to the Bank for International Settlements (BIS), 86% of the central banks globally are engaged in the development and use of CBDCs. We’ll also need to protect data security and privacy to reap the full benefits promised by new technology.

5.???China’s economy: high-quality and sustainable growth

China’s reform of the internet and property sectors coupled with its work to cut emissions in the energy sector has triggered turmoil but these shocks are aligned with key goals of the 14th Five-Year Plan and the vision for China in 2035. In 2022, the new growth points will be in the areas of digital economy, new infrastructure, new energy and innovative technology. Regulatory reform will also promote common prosperity, the ‘dual carbon’ national goal and the steady development of the real estate sector.

GBA will be the driving force behind China’s focus on high-quality economic development and a critical corridor for cross-border trade, investment and financing.

6.???Inclusive recovery: addressing poverty and reducing inequality

The pandemic has hit the poorest and most vulnerable hardest, pushing millions more into poverty and entrenching inequality. The Asian Development Bank (ADB) estimates that the pandemic has forced an estimated 75 million to 80 million Asians into extreme poverty since 2020. Progress has also stalled in hunger alleviation and improving health and education.

We need to urgently address and reverse the devastating impact of Covid-19 on poverty and inequality. Meanwhile, building resilience is critical to minimise the impact of disasters and prevent future crises.