Apart from creating a global economic slowdown, the coronavirus pandemichas lead to major shifts in policies as Asia’s leading emerging economiesare turning inwards.
As per the report by *The Economist Intelligence Unit*, the export-ledgrowth model traditionally adopted in Asia is running out of favour, andgovernments are looking to cultivate more self-sustaining economies.
The report said that an inward turn in economic policy was already underwayin Asia before the arrival of the coronavirus (COVID-19), but the globaldisruption caused by the pandemic has accelerated this shift.
The report pointed out that in China, policymakers are discussing a “dualcirculation” strategy that aims to foster resilience by emphasizing the“internal” circulation of the domestic economy over the “external”circulation of the global economy.
Whereas, the Indian government has launched “self-reliance” movementdesigned to reduce perceived supplychain vulnerabilities. Meanwhile, amidthe pandemic, Indonesia has unveiled import substitution policies aimed atsupporting domestic industry.
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Among its key findings, the report said that the inward turn in economicpolicy across emerging Asian markets is driven by Asia’s leading emergingeconomies are turning inwards and security concerns. “China’s focus onself-sufficiency is shaped by the worsening trajectory of its relationswith the US, while India’s shift in the same direction stems from concernsabout economic dependence on China,” said the report.
The report projected that under these policy drives, more support will beforthcoming household incomes and spending, which will support Asia’sdomestic consumption sectors. “We also see opportunities in industrialsectors tied to government efforts to reduce import dependency,” it said.
The report was of the view that Asia’s inward turn represents a step backfrom closer global integration, but is not a move to autarky: countries inthe region will still present significant commercial opportunities forforeign businesses and investors.
