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Voice of Asia: Forces of Rehabilitation, Rectification, and Reform Offer Hope for Economic Rebound in 2021

Latest Voice of Asia report from Deloitte Insights also includes forecasts for every major regional economy, discusses impact of recent US elections, and explores the rise of digital life in Southeast and South Asia

The latest Voice of Asia report from Deloitte Research explores three forces — Rehabilitation, Rectification, and Reform — that are set to bring a modest recovery to the regional economy in 2021 as it emerges from the shadow of COVID-19.

Economies with most room to maneuver on policy are set to outperform

According to the report, much of the regional economy can be nursed back to its pre-COVID health by the end of 2021, with infrastructure, communications/IT, and healthcare among the sectors likely to outperform.

The key prescriptions for this rehabilitation, it suggests, are a halt to the descent into protectionism of the world's superpowers, policy rate cuts in some countries (India and Indonesia), and greater adoption of unconventional monetary approaches such as yield curve control1 and forward guidance2. The report also suggests that as fiscal support is rolled back in a measured way, governments will continue with targeted measures introduced due to the pandemic, such as eased loan repayment conditions and government-backed loan guarantees.

"Territories that have more policy room to maneuver will outperform, as should those with large engines of domestic demand," says Deloitte China Chief Economist Sitao Xu. "As far as exports are concerned, technology should be a bright spot, particularly as many next-generation tech concepts become a reality. The reconfiguration of supply chains can boost economies that offer lower-cost production, and there could be a revival in foreign direct investment."   


Healthcare, corporate borrowing, consumer debt, infrastructure programs, and business ecosystem issues still to resolve

Although the above base case for economic rehabilitation in Asia-Pacific appears sound, Voice of Asia acknowledges that various aspects of regional economies need to be improved to ensure a fully-fledged recovery.

These include healthcare systems exposed by COVID-19 pandemic; high levels of corporate borrowing in China, elevated consumer debt in economies such as Malaysia, South Korea, and Thailand; delays in infrastructure investment (India, Indonesia, and the Philippines); and stalled progress on business ecosytem enhancements (India and Indonesia).


Signs of accelerated reform from across the region

In a section on reforms that will be required to support economic recovery, Voice of Asia cites an easing of protectionism, tackling technological disruption, and addressing climate change as key areas.

Progress has already been made, with China continuing to open up its economy and targeting technological self-sufficiency, and Indonesia's Omnibus Bill set to reform across a vast array of areas including the negative investment list (which now has only six sectors where foreign investment is prohibited). Smaller economies such as Vietnam, which recently signed a free trade agreement with the European Union, are also implementing reforms.

"It's prudent to point out, given the year we've had so far, that this report relies on some assumptions, the main one being that management of the pandemic will improve and mitigate risks, even before vaccines are rolled out," adds Xu.

"This should improve policymakers' confidence in being able to ease pandemic restrictions, which will spur spending by consumers, and increases in businesses' hiring, technology investment, and capacity. Even travel and tourism could see something of a recovery, although it's clear they face a longer road to a full rebound than most other sectors do."

Easing the impact of the pandemic will require the many parts of Asia-Pacific that have managed it well so far to continue doing so. This is not just about governments, with people's selfless willingness to fight the pandemic by complying with lockdowns, wearing masks, and sticking to physical distancing rules also playing a vital role.


What to expect from the Biden administration

In its penultimate section, the latest edition of Voice of Asia looks at what the results of the US election mean for Asia-Pacific. Deloitte's base case is that US-China relations and trade policy are likely to become more finessed than fraught; domestic US policy stimulus is set to boost Asian commodity and manufactured goods exports; and that the new administration's rebuilding of alliances will benefit Southeast Asian countries and India.


Surge in Southeast Asia and South Asia demand for digital services

The financial part of the report summarizes the findings of The Next Wave: Emerging digital life in South and Southeast Asia, a recent Deloitte China study that explored the rapid rise of digital life in both regions.

The Next Wave reveals the extent of both regions' surge in demand for digital services since the COVID-19 pandemic began, with 78% of respondents citing increased use, particularly in relation to TV streaming, online games, e-commerce, social networking, online office access, and online education.

There has also been a surge in demand for digital payments, creating opportunities for fintech companies to use digital platforms to provide convenient services, particularly where there are large under-banked or unbanked populations.

Although people in South and Southeast Asia enjoy e-commerce for its convenience and speed, extensive product offerings, and lower prices, the survey reveals that most shop online only when they need to, the survey found. This leaves the door ajar for new entrants, particularly in relatively less developed economies of both regions.

"Overall, digital life is set to contribute significantly to the economies of both regions," concludes Xu. "That said, there are still gaps for South and Southeast Asian countries to bridge in digital infrastructure, encouraging more use of e-payments, serving the under-banked, network security, cross-regional communication and coordination, and the development of local digital innovation ecosystems and talent."   


Appendix: Voice of Asia Forecasts3 for 2021


  • GDP: +3.1%
  • Addressing families' "cash crunch" with measures to encourage consumer spending and company hiring
  • Sluggish pace of major reforms; additional support might be required

Chinese Mainland

  • GDP: +7.5%
  • Focusing on improving quality of growth by supporting consumers and SMEs, and stabilizing leverage
  • Frictions with US remain biggest downside

Hong Kong

  • GDP: +3%
  • Support from Chinese Mainland and local government will be key; still has vast fiscal reserves


  • GDP: +10%
  • Boost from strategic focus on and policy support for jobs, the services sector, and private demand


  • GDP: +5.6%
  • To benefit from infrastructure projects, moving up value-chain, and labor market reform
  • Resource exports (palm oil, coal), and hence prices, remain constrained


  • GDP: +1.9%
  • Modest recovery on quantitative easing, fiscal stimulus, IT demand, digitalization, and online retail
  • Slow rebound in key sectors and tourism; consumer spending could decline as fiscal support is removed


  • GDP: +6.7%
  • Tailwinds from strong tech sector, social assistance for households to boost spending, and investment from China
  • Headwinds from political uncertainty and household spending decline after loan repayment moratorium ends

New Zealand

  • GDP: +3.8%
  • Corporate optimism vs. household caution
  • Recovery to be constrained by high susceptibility to global conditions

The Philippines

  • GDP: +7.0%
  • Remittances to recover; increased infrastructure investment; rebound in business process outsourcing
  • Heightened political and geopolitical risks; instability in restive south


  • GDP: +5.5%
  • Manufacturing to recover on demand rebound; vibrant tech demand to boost electronics sector.
  • High unemployment to weigh on demand; risk of credit tightening; possible "fiscal cliff"

South Korea

  • GDP: +3.0%
  • Targeted fiscal policy to support incomes and employment; external demand to recover


  • GDP: +3.5%
  • To benefit from China recovery, tech company supply chain relocation, fiscal policy support, and cheap crude oil
  • Geopolitics an ongoing concern


  • GDP: +5.5%
  • Possible boost from bi-lateral travel arrangements; farm incomes set to improve; fiscal support to continue
  • Export growth to be slow; weak labor market could dent consumer confidence; inefficient disbursement to constrain impact of stimulus; growing political risks


  • GDP: +7.9%
  • Strength in services, agricultural exports, and manufacturing activity;  exports and private investment the main growth drivers



  1. Yield Curve Control Definition (
  2. Forward Guidance Definition (
  3. Deloitte and Centennial Asia Advisors

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