Opinion | Asia’s export-driven growth model is on its last legs. What comes next?

This slowdown is mostly man-made – the biggest dampener being the US-China trade war, which aggravated the cyclical Chinese slowdown last year on the back of reforms aimed at getting a grip on the debt overhang. As Brexit moved from tragedy to farce, Europe also slowed when populist unrest sparked a huge debate on how to deal with the new unknowns.

Right-wing populists focus on European fears of being overwhelmed by the growing tide of migrants. Left-wing populists want more welfare spending that right-wing conservatives reject.

Meanwhile, many emerging markets are in the throes of leadership changes, with major elections being called in India and Indonesia. Tensions in the Middle East and North Africa have worsened with conflict erupting in Libya and Algeria. 

So far, East and South Asia are still the growth poles in the global gross domestic product league, enjoying rates above 5 per cent per annum, but there are signs that this is flagging. The World Trade Organisation is forecasting that global trade growth in 2019, at 2.6 per cent, will be slower than the global GDP growth of 3.3 per cent forecast by the International Monetary Fund – a historical signal that recession may be on the horizon.

For some time, it has been apparent that the Asian export growth model that relies on cheap labour is already nearing the end of its shelf life. The US and European markets have reached maturity in terms of consumption power, while protectionism and automation mean that production is shifting back to home markets. Consequently, Asian economies will have to look to domestic consumption to sustain growth. But for several reasons, most Asian governments are not ready to make that major policy shift.