Asia: Covid scars and political rivalry

Economic research

  • China,
  • India,
  • Indonesia,
  • Japan,
  • Malaysia,
  • Philippines,
  • South Korea,
  • Thailand,
  • Vietnam
  • General economic

11th October 2021

Asian trade is at a crossroads in the wake of the Covid-19 pandemic and with the US-China trade war ongoing.

Key points:

  • Record numbers of new Covid-19 cases slow the economic recovery in Asia, but only temporarily and mainly in countries with a low percentage of the population that is fully vaccinated.China and Vietnam show highest growth in Asia since the outbreak of Covid-19. India‚Äôs economy, despite high growth rates, is likely to experience a setback. Economic activity in Thailand and the Philippines will not reach pre-pandemic levels before 2022.

  • Rising exports are contributing to the recovery in most countries, with Vietnam and China taking advantage of a global boom in demand for computers and electronics.

  • Vietnam will also benefit from the ongoing US-China trade war, with a strong recovery in FDI inflows. The trade war has not resulted in a significant decoupling of the US and Chinese economies.

  • The direct impact of supply chain distortions will disappear, but the pandemic will leave scars with long-term implications for growth and international trade. India and the Philippines will suffer economic scarring the most, while Vietnam and Taiwan probably feel it the least. Differences in the containment of the Covid-19 outbreak and the level of fiscal support are the main explanatory factors.

  • Companies will rethink and redesign their supply chains because of the disruptions that have led to shortages of essential commodities around the world and increased costs. For governments this is, together with the trade war, a reason to place more emphasis on self-reliance in crucial sectors such as high-tech and pharmaceuticals.

  • Free trade agreements offer some counterbalance to these developments. Like trade policy in general, however, they are increasingly tools of geopolitical aspirations and less inspired by the pursuit of economic cooperation.

Related documents

Disclaimer, no warranties and exclusion of liability

Atradius disclaims any representations or warranties of any kind, whether expressed or implied, including but not limited to implied warranties of merchantability and fitness for a particular purpose of (INCLUDING BUT NOT LIMITED TO) any information contained on or provided via this Web Site and/or any service described or promoted on this Web Site, including warranties with respect to infringement of any patent, copyright, or other rights of third parties. Atradius shall not be liable for any injury, loss, damage or expense arising out of any access to or use of this Web Site or any site linked to or from this Web Site, including, without limitation, any loss of profit, indirect, incidental or consequential loss. Atradius furthermore shall not be liable for persons, property damage or especially direct, indirect, incidental, consequential, immediate or subsequent (pecuniary) loss. While Atradius has used reasonable efforts in maintaining a virus-free Web Site, it declines any liability for persons, property damage or especially direct, indirect, incidental, consequential, immediate or subsequent (pecuniary) loss which may result from transmission or downloading of computer viruses. Atradius cannot be held liable for hardware damage, loss of data, alteration of data, or downtime.