The easing of Covid-19 restrictions and changing supply chains have accelerated growth in Asia, even as inflation and climate change are causing serious headwinds.
While Southeast Asian countries such as Thailand and Vietnam lifted restrictions in 2021, Japan reopened its borders to foreign travelers in the last quarter of this year, and China began to ease its Covid-19 policy, indicating a gradual recovery of the economy. Normal situation in the Asia-Pacific region.
The same issues that are hampering global economic growth – inflation, supply chain bottlenecks and rising commodity prices caused by Russia's continued incursion into Ukraine – have plagued Asian economies; However, the region is still ahead of the rest of the world.
With rising commodity prices continuing to strain supply chains, East Asia was the only region to see trade growth in the third quarter of the year, even as trade volumes world trade was declining.
Lower regional growth projections are largely due to slowing growth in China, with the International Monetary Fund forecasting the country's growth to slow to 3.2% in 2022, in part due to politically imposed economic constraints. strict zero count of COVID-19. .
However, the rest of the region is expected to grow by 5.3%, putting China ahead of its neighbors for the first time since 1990, thanks in part to the strong performance of South Asia and ASEAN countries such as Vietnam. .
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Since 2020, a number of governments and companies have followed the so-called "China+1" strategy, diversifying manufacturing capacity to expand into other countries while maintaining operations in China.
In particular, Vietnam has emerged as a domestic manufacturing and supply chain alternative to China, and increased exports to the United States and other countries have helped boost GDP growth to 8% in 2022, the fastest growth rate since 2011.
Bangladesh, India, Malaysia and Thailand have also benefited from shifting global supply chains from China, including industries ranging from textiles and auto parts to high-tech electronics like smartphones.
The recent increase in demand for electric vehicles (EVs) has prompted many emerging markets in the region to invest in the production of electric vehicles.
Already a leading auto manufacturing hub in Southeast Asia, Thailand has developed new policies to attract EV makers from more mature markets and increase production, including cash subsidies for electric vehicles from tourism.
The country expects electric vehicle production to account for 30% of total vehicle production by 2030.
Meanwhile, Indonesia is poised to become a major player in the electric vehicle market in the region as the world's two largest electric battery manufacturers plan to invest in electric vehicle projects in the country, which account for about a quarter of global vehicle shipments. Nickel, which is a major component of electric vehicle batteries.
The country is also targeting a growing segment of the solar panel market. In late January, the Indonesian government announced plans to build a $4 billion polysilicon plant after prices for the material, a key component in solar panel production, hit a 10-year high in 2021.
climate solutions
The natural disasters of 2022 have highlighted the need for global agreements on climate change.
Floods in Pakistan in late summer inundated a third of the country, killing more than 1,700 people and causing damage and losses estimated at $32 billion.
About 1.2 billion people in South and East Asia are at high risk of flooding, including 395 million in China and 390 million in India . risks. Floods and other natural disasters.
Malaysia has become a world leader in implementing forecasting and monitoring technology, and the Department of Irrigation and Drainage launched its National Flood Forecasting and Warning System later this year.
Emerging markets are also using carbon credit mechanisms to protect their rainforests , hoping to prevent deforestation that could exacerbate the negative effects of climate change.
A study published in February by the Center for Natural Climate Solutions at the National University of Singapore found that 58% of threatened forests in Southeast Asia could be protected through carbon credit schemes.
The region contains 15% of the world's remaining rainforest, mostly in Indonesia, which has seen higher levels of deforestation than neighboring countries in recent years.
In the context of the UN Climate Change Conference COP27 in Sharm el-Sheikh, Egypt, Indonesia held talks with Brazil and the Democratic Republic of Congo to form a strategic alliance for forest conservation tropical called OPEC.
empower the future
The International Energy Agency (IEA) projects that renewable energy capacity in the Asia-Pacific region, excluding China, will increase by 360 GW, or 70%, between 2022 and 2027, with solar power accounting for more than two-thirds of the new capacity. Your location
This energy transition could help some of the region's emerging markets become major exporters of solar energy.
Indonesia has announced several new solar mega-projects in 2022, partly supported by demand from Singapore, which aims to import up to 4 gigawatts of low-carbon electricity by 2035, the equivalent of 30% of its request.
Although Indonesia has only 210 megawatts of installed solar capacity, one of the smallest solar regions in the world, plans for projects of up to 17,000 megawatts have begun. All but 3,300 megawatts are for export, indicating the great potential for future renewable energy projects for the local market.
Meanwhile, Malaysia banned the export of renewable energy in October 2021, citing domestic needs.
Although the severe drought in China has reduced production in 2022, the introduction of pumped storage technologies could increase the role of hydropower in the global energy mix . This low-cost, low-carbon source of electricity is likely to spread widely across the region, and the International Energy Agency predicts that 75% of new hydropower capacity will come from large projects in Asia and Africa.
In August, India pledged $2.4 billion to develop hydropower projects in West City and Seti in Nepal, with a total export capacity of 1.2 gigawatts. Another large hydroelectric project was completed this year, the 720 megawatt Karut project in Pakistan, funded by China, although the level of funding for China's Belt and Road Initiative has dropped significantly in the region since the pandemic .
Biogas is another energy source with great potential for developing a green circular economy in the Asia-Pacific region. In 2018, the International Energy Agency estimated that the region could produce up to 200 million tonnes of oil equivalent by 2040. The region also has the lowest amount of biogas in the world. Production costs due to cheap raw materials and favorable government policy and expertise.
Several notable biogas projects are being accelerated in 2022.
In October, India commissioned the continent's largest biomethane plant in Sangror, Punjab, thanks to a $27 million investment from German bioenergy company Verbio. The plant has eight digesters with a capacity of 10,000 cubic meters.
In April, Indonesia's national energy company Pertamina and Japanese engineering firm JHG Holdings signed an agreement to convert methane from palm oil production into biofuel.
Meanwhile, the Philippines announced in August that it would build a 20 cubic meter digester in Baler, Aurora, with funding from the Ministry of Science and Technology.
Transitional funding
Partly due to the impact of this year's floods in Pakistan, the biggest achievement of COP27 was the creation of a funding mechanism to compensate vulnerable countries for loss and damage caused by natural disasters caused by the climate change, although details of the mechanism remain. To reinforce.
Similarly, a number of emerging countries have used innovative climate finance solutions to meet their emissions obligations .
The focus has been on helping Indonesia, which chairs the G20 in 2022, move away from burning coal. The archipelago is the eighth largest emitter of greenhouse gases in the world, with coal generating around 60% of electricity and serving as a major industry in some areas.
At the G20 Summit in Bali on November 15, the $20 billion Indonesian Just Energy Transition Partnership (JETP) was launched to decarbonize the Indonesian economy, with the support of all G7 countries, as well as the Denmark and Norway.
Deployment of renewable energy capacity in the country is expected to triple from 2016-2021 levels between 2022 and 2027, with solar and hydro generating most of the new growth. The establishment of competitive auctions by presidential decree in September 2022 could considerably accelerate their deployment process.
Similar JETPs have been launched for Vietnam and India following an $8.5 billion deal to reduce coal use in South Africa from November 2021 .
Oxford Business Group
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