View from Asia: all hands on deck to keep Asian economy from sinking

The IMF April 2017 Regional Economic Outlook was ominously entitled ‘Preparing for choppy seas’. While the IMF praises Asia for remaining the world’s strongest region in the short term, enjoying steady growth, it also warns that in the medium term Asia is heading for turbulence due to ageing populations and sluggish productivity; structural reforms are a key long-term solution.

But if Asia founders, could the wider global economy sink too? It is not a simple homogeneous scenario of doom. Economies comprise many influencers and institutions (policy units, suppliers, manufacturers, assemblers, logistics, freight forwarders, distributors, workforces, etc) and a broad economic gloomy forecast does not apply to every entity.

Rising uncertainty and disruptions are a given for all businesses that address risks both within Asia and externally, such as de-globalisation, the protectionist US administration and European disintegration. Smaller enterprises, which make up the bulk of business entities, have a higher risk threshold and the nimbleness to adapt to changing conditions. Their mantra has always been ‘cheaper, better, faster’ or risk dying.

Asian businesses that tend to weather the storm are those that can capitalise on opportunities. These include commodity and metal exporters to China; those serving the ageing population; those reskilling older professionals, managers, executives and technicians; productivity enhancers (such as education, digitalisation, manufacturing innovation); and those that can adapt to changing working age demographics, for example retraining the old at reduced wages, and late-dividend countries hiring younger workforces, especially from early-dividend countries such as India, Indonesia and Philippines.

Policy-makers will be busy managing growth reforms and structural transformation. For ships to survive choppy seas, it takes effort from all stakeholders, be they ship owners, builders, captains, crew and even passengers. And who can forget the ever-present threat of terrorists, military conflicts, sharks and pirates?

Lawrence Yeo is CEO of AsiaBIZ Strategy, a Singapore-based consultancy that provides Asia market research and investment/trade promotion services. Email: lawrence@asiabizstrategy.com