What’s Powering Asia’s Growth? And What Does It Mean for the Rest of the World?

The rise of Asia has been among the most enduring narratives of globalization. The “dawn of the Asian century,” as Kishore Mahbubani, chairman of the Asia Research Institute in Singapore, has called it, has been a long time coming.
In the past, the Asian tiger economies – Japan, South Korea and Singapore – dominated the Asian growth story, and at the turn of the century China was at the forefront. Today, India, Vietnam and Indonesia emerge as important players in the regional economy and global value chains, according to the World Economic Forum.
Asia is at a critical juncture, where the progress of the past few decades is coming together to add a new chapter to the region’s history. India’s economy is expected to grow by 6.8% this year. India’s nominal GDP will overtake that of Japan by 2025 and Germany by 2030, making it the world’s third-largest economy with a GDP of $7 trillion. Its foreign trade is set to grow by more than $393 billion over the next decade. It is also emerging as a leader in digital infrastructure development. Its biometric identification system, Aadhaar, is the world’s largest.
In May, the IMF added 0.4 percentage points to its forecast for China’s economic growth in 2024, to 5%. Even if growth slows to 3%, China’s 2030 GDP will still be about $5 trillion higher than it was in 2022. As the world’s second-largest economy, China continues to redefine global standards and push the boundaries of innovative global industries, such as electric vehicles, renewable energy, and the digital economy.
Trade within the Association of Southeast Asian Nations (ASEAN) is expected to grow by $1.2 trillion over the next decade. By 2031, its exports are expected to rise by 90%, against a global trade growth of less than 30%.
Asia is experiencing an era of increased connectivity and cooperation within the region. Global companies and East Asian multinationals, including those in China, are moving manufacturing and supply to Southeast Asia. These countries are well connected to each other and to major markets around the world, which has created opportunities for companies to build integrated supply chains and benefit from markets throughout the region.
This change is reinforced by new trade agreements such as the Regional Comprehensive Economic Partnership and the Comprehensive and Progressive Trans-Pacific Partnership, whose ratification means the region has competitive trade access with countries that together account for more than 40% of global GDP.
Asia has also become a hub for global technology and innovation. By 2030, its fintech revenues are expected to exceed those of North America. A Boston Consulting Group survey of 21,000 consumers in 21 countries found that Asian consumers are more positive about AI than consumers in the West.
But the Asian story is still one of contrasts. The region faces challenges that are often more severe than the rest of the world. 50% of global carbon emissions come from the Asia-Pacific region. Myanmar, the Philippines, Vietnam and Thailand are among the countries most affected by climate change in the past 20 years. A total of 37% of ASEAN’s GDP is projected to be at risk if temperatures rise by 3.2°C.
Financial inclusion also remains a challenge, with nearly 44% of adults in the ASEAN region unbanked. But what makes Asia today different from the past is the stock of innovative, scalable solutions to address these challenges. Asia is expected to generate 43% ($4.3 trillion) of the $10.1 trillion revenue opportunity available by 2030 from activities such as expansion of renewable energy, energy efficiency in buildings, transportation, and agriculture.