Fresh outlook: Economic winds of change

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As global trade wars and protectionism become rife, it will be difficult for Asia’s economies to embrace globalisation and export-led growth, says DBS Bank in a recently released report titled Asia 2030. The ongoing wave of information technology and automation may well suspend the “flying geese model” of the past, when older technology, know-how and low wage jobs moved from wealthier economies to poorer ones. But even as countries like China move up the value chain, the bank notes that they might not necessarily give up on labour-intensive manufacturing. Instead, they will deploy automation and robots to maintain their competitiveness.

More advanced economies will be better placed than less developed ones to capture value from the new technologies, leading to a more persistent divergence in income levels across Asian countries, says DBS. Countries like India will face the strongest headwinds in terms of growing their share of manufacturing. The challenge will be to create high quality jobs in the services sector to sustain high GDP growth rates.