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Asia 2022: 5 trends to watch

Published 5 January 2022 in Asian hub • 5 min read

With vaccination rates now accelerating across Asia, the region will top the world’s growth league in 2022. IMD picks five trends to watch in the region’s key countries.


China will continue to drive innovation

China looks set to keep its zero-COVID strategy in place, and so to keep its borders closed to the rest of the world through 2022. Combined with COVID-19 measures that will continue to depress consumption of services (but not of goods – which remains robust), economic growth looks set to fall to 5-6%, according to most forecasters, down from 8% in 2021.

That, however, will not stop businesses in the country from continuing to drive innovation, especially in the areas of new retail, industrial Internet of Things and supply chain digitization, says Mark Greeven, Professor of Innovation and Strategy at IMD.

Moreover, while regulation of China’s Internet sector looks set to continue, keeping the changes in perspective is important. “I don’t see this as just a tightening,” said Greeven. “I think this is a back-and-forth process of regulatory reforms that will lead to lots of adjustments, including revisions of the new regulations, along the way for the next two to three years; the purpose is to find a way to regulate the Internet sector, and China’s ‘big tech’.” 

As Greeven noted at a recent IMD industry dialogue with senior leaders in Asia’s retail sector, “China stands at the center of world retail innovation. The revolution launched by its live-streamers, super-apps, social commerce and other new practices has only just begun.”

Japan’s economic rebound to be tempered by caution

With a new prime minister, Fumio Kishida, at the helm, Japan will see an economic rebound in 2022.

Kishida’s mandate centers on reviving the economy from its COVID-19 downturn. Stimulating growth will be a ¥56 trillion ($490 billion) stimulus package announced in November, with more funding for everything from semiconductor manufacturing and rural digitization to households and travel subsidies.

However, as IMD visiting professor Kazuo Ichijo says, “Given the cautious approach of Japanese government towards COVID-19, the economic recovery of Japan will be quite slow.”

So, while growth should rise to 3.4% in 2022, up from 1.8% in 2021, it will drop back to just 1.1% in 2023 according to the OECD’s most recent economic forecast.

Also in Kishida’s stimulus package are pay rises for civil servants and tax breaks aimed at encouraging companies to raise wages. “However, as non-Japanese are currently not allowed to enter Japan, this will have a negative impact on business development in Japan by foreign companies,” said Ichijo.

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