THE economic fallout of Covid-19 has accelerated the relative decline of the US as the world's economic engine and is increasing the centrality of Asia, and particularly China, to the global economic cycle, said ANZ and Eurasia group in its latest report.
The report, entitled "Asia's economy: taking centre stage", also noted that the combined effects of the US-China trade war, the global downturn, and the rapid growth of China's neighbours have reduced the importance of the US consumer market for Asian economies.
In the first quarter of 2020, the Asean countries surpassed the US as China's largest customers for the first time, purchasing 16 per cent of Chinese merchandise exports. Only 14 per cent were absorbed by the US market.
This trend is likely to continue in the wake of Covid-19 as trade and supply chains become more regionally concentrated, and as Asean recovers more quickly than the US, said the authors, Richard Yetsenga, chief economist and head of research at ANZ; and Ian Bremmer, president and founder of Eurasia Group.
The authors also noted that while domestic political instability may come to the fore in many economies after the most acute phase of the pandemic has passed, domestic pressures are far less pronounced in Asia.
"In Korea, Singapore, Hong Kong and Vietnam, for instance, the response to the virus often has been more competent and the economic shutdowns much less broad-based than seen in many advance economies," said the authors.
"Political leaders in Asia likely will pay less of a political price than in the US and many European countries given their generally more robust public health and economic responses to the pandemic."