Close

In a world where chaos seems to reign, could Asia give us reason to smile?

In a world where chaos seems to reign, could Asia give us reason to smile?

It would seem 2017 is shaping up to be a rough year. But that might not be the case - at least if you hear Deloitte talk up the potential of Asia being more important to New Zealand's economic growth than ever in its latest Voice of Asia report. Plus: numerous graphs to inspire optimism.

One could certainly argue that we’re in for a rough time in the next few months. The UK is leaving the European Union. Donald Trump is president of the United States. And on. And on. And on.

But 2017 could be better than we think. Really.

There’s a few historical facts to consider here:

Wars are trending downward.

Source: Vox

Nuclear stockpiles are decreasing.

Source: Center for Arms Control and Non-Proliferation / Lesley McNeish

Life expectancies are increasing.

Source: WHO

Maternal mortality is also down.

Source: WHO

Child labour is not as common as in years past.

Source: ILO

And extreme poverty is also decreasing.

And that's not all. Technology continues to advance, more countries are becoming democracies, and personal freedoms and equal rights are generally increasing, not decreasing.

In the business realm, there’s positive signs too – at least as Deloitte tells it. A big reason for that positivity: continuing growth in Asia.

Deloitte New Zealand partner Linda Meade says Asia’s growth is good news for New Zealand, which is increasingly inter-connected with the economies and cultures of Asia. “With nearly 60 percent of the world’s population, Asia is a primary hub of global diversity and innovation and is hugely important for New Zealand’s future prosperity and wellbeing.”

Deloitte Australia economist Chris Richardson says that despite protectionist rhetoric from the US and gloomy forecasts from the International Monetary Fund, three factors suggest global growth is about to surprise on the upside, with Asia leading the way. “First, the global economy is finally normalising after a decade of shocks and a natural healing process is underpinning a more resilient recovery. Second, world trade is already lifting and the benefits of this are spilling into Asia. And third, Asia’s mega-economies of India and China are increasingly being powered by consumer booms acting as a stabilising force in their economies and for the region.”

Despite the shock of Trump and Brexit, leading indicators suggest world trade volumes are ready to increase – which could lead to a financial windfall for businesses based in Aotearoa. Deloitte China economist Sitao Xu says the continuing devaluation of China’s currency – the yuan – could stymie that growth, however. “If it’s too aggressive, other Asian currencies may also fall – which could tempt the incoming US president to follow through on his protectionist rhetoric and hit trade,” he says. “Asia is increasingly plugged into China-centric value chains. Any impact on China from yuan devaluation or other policy changes could have a significant knock-on effect on other Asian economies. However, in the long run, most economies in Asia will benefit if China succeeds in rebalancing its economy.”

Although the pace of growth has slowed, Xu adds the consumer booms in China and India will continue to power the world’s economy. “A new and optimistic generation is taking the lead in driving the direction of their economies: one that is technologically savvy, comfortable with the borderless consumerism of the global middle class, and yet imbued with the consumption-smoothing instincts of its parents and grandparents,” he says.

Deloitte New Zealand’s Linda Meade says something similar. “There has never been a better time to create a cohesive narrative that reflects the interdependence of the region and provides a glimpse of what’s possible across Asia.”