As China’s property market tanks, countless families find themselves entangled in payment problems. Many struggle to make mortgage payments, often on properties they have yet to receive. Others are stuck, like university administrator Nelson Lau, 32, paying for a new apartment but finding it hard to sell his existing property amid falling housing prices.
“We’ve had to cut back on groceries,’’ said the father of one from Guangzhou. “Some days, we feel like we are living pay cheque to pay cheque…it really keeps me and my wife up at night.”
In India, call centres are having to confront the dilemma posed by generative artificial intelligence (AI). Although AI helps improve business efficiency and customer experience, it has also led to Indian entrepreneur Suumit Shah axeing staff from his e-commerce site dukaan.com.
“We had to lay off 90 per cent of our support team because of this AI chatbot,” he tweeted earlier this year. “Tough? Yes. Necessary? Absolutely.”
It’s a similar situation in the Philippines, where in May, Senator Imee Marcos called for an inquiry, citing research estimating that digital automation could make 1.1 million jobs in the Philippines obsolete by 2028. “AI is developing faster than most people can comprehend, and is threatening to take away jobs and turn employment growth upside down,” she said.
But it is not all gloom for India and the Philippines. The two countries, together with Thailand, Vietnam and Indonesia, are getting new investments from the US and Europe as supply chains get reconfigured.
After reaping the benefits of globalisation and ultra-low interest rates for more than a decade, Asia’s economies must now confront a very different world.
A series of shocks and disruptions have occurred over recent years that few foresaw. Among them, rifts along multiple axes between China and the United States; a global pandemic; the reshaping of supply chains; the resurgence of inflation, which triggered draconian and rapid tightening of monetary policies; more frequent climate-related disasters; a possibly prolonged economic slowdown in China and, most recently, the acceleration of automation, driven by the rapid adoption of AI.
Taken together, these developments are causing tectonic shifts in the global economy, and for Asia a source of both threats and opportunities, but also great uncertainty.
At least over the next year, the outlook is clouded by a likely slowdown in the global economy. In the July update on its World Economic Outlook, the International Monetary Fund (IMF) projects that global gross domestic product (GDP) growth will fall from 3.5 per cent in 2022 to 3.0 per cent in both 2023 and 2024. By historical standards, this would be markedly weaker than the average of 3.6 per cent growth during 2010-2020.
While a global recession seems unlikely, especially with United States growth remaining robust, it can’t be ruled out, given that monetary tightening – which is still not over – takes about 12 to 18 months to fully impact the real economy, and the economic slowdown in China. And even though inflation has come down globally this year, it could remain a wild card. Food prices have surged in recent months in the wake of Russia’s refusal in July to renew a deal which allowed ships to transport grain from Ukraine across the Black Sea and India’s curbs on rice exports. Meanwhile, recent announcements of oil supply cuts by Saudi Arabia and Russia are pushing fuel prices upwards.
The growth of world trade – on which Asia’s economies are highly dependent – is slowing even faster than that of GDP. The World Trade Organisation (WTO) estimates that by volume, goods trade will rise by only 1.7 per cent in 2023, compared with an average of 2.6 per cent in the 12 years since it collapsed during the global financial crisis of 2008.
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