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Voice of Asia 2020

Asia outlook more positive for 2020 but Novel Coronavirus a threat

  • At the end of 2019, the economic position for China looked to boost the region’s economies. However, the recent Novel Coronavirus outbreak is shading the outlook for China, with flow-on effects expected to be felt globally. 
  • Improving US-China trade relationship lends stability and calms trade concerns experienced over 2019. 
  • Southeast Asia continues to grow in strength and importance for the region, especially in manufacturing.
  • Continued Asian income growth brings fresh opportunities for NZ exporters.

Wellington, NZ, 28 December 2020 – Prior to the coronavirus outbreak, the Asian economy was set for a rebound in 2020 as some of 2019's headwinds ease, trade relationships improve, Southeast Asian manufacturing grows, and incomes rise according to Deloitte's latest Voice of Asia report (published shortly before the Novel Coronavirus escalation).

“Increasing evidence of economic stabilisation in China should have a positive impact on the New Zealand economy given our high levels of engagement with China as a major trading partner” said Zoe Wallis, Deloitte Chief Economist.

The recent signing of a ‘phase-one’ US-China trade agreement lends strength to the narrative of an Asian economic rebound. 

“The US-China trade deal marks a de-escalation of the trade tensions that characterised much of 2019. Should this important relationship continue to stabilise, we will see a corresponding rebound in trade confidence globally” said Wallis.

However, the outbreak of coronavirus is a significant threat to this outlook. The overall impact will be highly dependent on how far and how fast the virus spreads. The amount of travel for Lunar New Year celebrations dropped dramatically and both domestic and international tourist travel from China is expected to fall significantly over coming months. In addition, consumption and manufacturing output are expected to fall in China.

“The Novel coronavirus will certainly impact on Chinese economic growth over the first quarter of this year and may require additional support from the government to help soften the blow,” said Wallis.

Looking at the wider underlying trends for Asia, manufacturing shifts in the region will also prove significant in 2020.

“We will likely see an increase in the number of companies choosing Southeast Asia as a base for their manufacturing activities rather than China” said Wallis.  “This is thanks to a lower cost of production, as China switches its focus to producing products and services higher up the value chain.”

Rounding out the evidence for a potential rebound is an increase in personal incomes.

“The trend toward higher incomes in Asia (and particularly China) continues” said Wallis. “With increased consumer spending power bringing further opportunities for NZ exporters over the medium term – particularly for high-end produce thanks to the maturation of e-commerce and supply chains in the region.”

The Deloitte 2020 Voice of Asia report notes that as we look towards 2020 there are some strong drivers of growth that may produce a reasonably upbeat outcome for Asian economies in the year ahead.

Report available for download here.


Market-by-market outlook


Australia's economic slowdown has been caused by home-grown factors including worsening drought conditions and house price declines. Although tax and interest rates have been cut, there may not be a meaningful pickup in the Australian economy until 2021.


The Chinese Mainland is regaining its balance despite a long-term, secular growth downtrend, and Hong Kong, despite well-publicized difficulties over the past several months, remains a world leading financial centre, with its currency peg to the US dollar holding firm, and could benefit from government stimulus.


India's economy has been suffering from the effects of the Non-Bank Financial Companies (NBFC) crisis after problems in its formal banking sector. Corporations are still highly leveraged. It should bottom out in 2019 but remain subdued despite government stimulus and amid considerable downside risks.


Indonesia looks set to maintain steady growth of about 5 percent in 2020, with a young workforce, increasing urbanisation and monetary policy support for demand. The economy is becoming more stable but has yet to fully take advantage of the diversion of production out of China.


Exports have contracted and business confidence is subdued, and natural disasters have further depressed economic activity, but GDP growth has been quite resilient. Economic growth is expected to sustain at about 0.5 percent over the next two years.


Strong domestic demand led by household spending underpin Malaysia's economic resilience, and its exports have outperformed. Its competitive currency, growth in manufacturing activity and a resumption in infrastructure projects are expected to support continued economic growth.

New Zealand

The economy slowed in early 2019, largely due to global headwinds. It is expected to return to trend levels of about 2.5 percent growth on average in the next couple of years, supported by factors including a tight job market, still-strong population growth and decent export prices and volumes.

The Philippines

The Philippine economy bottomed out in mid-2019 and is set to be boosted by a revival in the electronics sector, strengthening exports thanks to an expected pick up in the Chinese economy, continued strength in remittances and policy support that should drive consumption.


Singapore is also expected to enter a recovery in 2020, supported by improving global growth and stronger electronics and precision engineering demand. There are also green shoots in finance, insurance, essential services and the "new economy". The outlook for investment growth is also positive.

South Korea

We are upbeat about prospects for the South Korean economy in 2020, with an expect increase in demand for its manufactured goods. Government measures including a record budget of KRW513.5 trillion (USD4.36 billion) for the year should protect against downside risks.


Taiwan's economy was resilient in 2019 despite
being caught in the crossfire of the US-China trade war and the step-down in
the global electronics cycle. We expect the economy to be outperform in 2020 on rising private investment, government policy to attract high-end manufacturing and other factors.


After a slow start, Thailand's economy is expected to pick up in 2H20, with export growth likely to have bottomed out, increasing tourist arrivals, rising farm incomes, positive fiscal policy and a recovery in private investment.


Vietnam is expected to remain one of Southeast Asia's outperformers in 2020. It is one of the main beneficiaries of the relocation of production from China, which is prompting a surge in foreign investment. Its main challenges are manpower constraints, supply chain frictions and an infrastructure gap.

Media Contact:

Alexandra Grace
Communications Manager
Deloitte New Zealand
022 624 2152

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