Easing COVID-19 restrictions and evolving supply chains It led to growth in Asiaalthough inflation and climate change pose significant headwinds.
Southeast Asian countries such as Thailand and Vietnam will lift restrictions in 2021, but in the last quarter of this year Japan has reopened its borders to foreign travelers and China has begun to lift its COVID-19 containment policySignaling a gradual return to economic normalcy in the Asia-Pacific region.
The problems that have slowed economic growth around the world (inflation, supply chain bottlenecks, and high commodity prices caused by Russia’s aggression in Ukraine) have also affected Asian economies. ; Despite this, the region continues to outperform the rest of the world.
High commodity prices continue to affect supply chains, East Asia was the only region to see trade growth even if global trade volume declined in the third quarter of the year.
The decline in regional growth forecasts is largely due to China’s slowdownThe IMF expects the country’s growth to fall to 3.2% in 2022, partly due to the economic constraints imposed by its strict zero-tolerance COVID-10 policy.
Despite this, the rest of the region is expected to grow by 5.3%China outperformed its neighbors for the first time since 1990, thanks in particular to the strong performance of ASEAN economies such as South Asia and Vietnam.
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Since 2020, several governments and companies have followed suit “China+1” strategyBy diversifying production capacity by setting up in other countries while maintaining operations in China.
In particular, Vietnam considers itself a regional manufacturing and supply chain alternative to China. Rising exports to the US and other countries helped lift GDP growth to 8% in 2022, the fastest pace of expansion since 2011.
Bangladesh, India, Malaysia and Thailand also benefited shifting global supply chains away from China, attracting industries from textiles and auto parts manufacturing to high-end electronics such as smartphones.
The recent surge in demand for electric vehicles (EVs). has also led a number of emerging markets in the region to invest in EV production.
Thailand, which is already the first car manufacturing center Southeast Asia has developed new policies to attract EV manufacturers from more mature markets and increase production, including cash subsidies for electric passenger cars.
The country wants electric car production to make up 30% of total car production by 2030.
At the same time, Indonesia is on track to become a major EV player in the region, the world’s two largest EV battery makers are set to invest in EV projects from mining to manufacturing, and the country has nearly a quarter of the world’s EV supply. Nickel, a key component of EV batteries.
The country is also targeting a share of the growing solar panel market. In late January, Indonesia’s government announced plans to build a $4 billion polysilicon industry in 2021 after prices for the material, a key component in making solar panels, rose to a 10-year high.
Solutions for climate
Natural disasters in 2022 emphasized the need for global agreements to combat climate change.
At the end of summer, Floods in Pakistan flooded one-third of the country, killing more than 1,700 people and causing $32 billion in losses and damages.
Asian countries are at the forefront of flood risk, with an estimated 1.2 billion people at high risk of flooding in South and East Asia, including 395 million in China and 390 million in India. using technologies such as artificial intelligence (AI) to monitor and mitigate flood risk and other natural disasters.
Malaysia became a world leader in the application of forecasting and monitoring technologies with the Department of Irrigation and Drainage implementing its National Flood Warning and Forecasting System at the end of the year.
Emerging markets are also applying carbon credit mechanisms to protect rainforestss, hoping to prevent deforestation, which could exacerbate the negative effects of climate change.
According to a study published in February by the National University of Singapore’s Center for Nature-Based Climate Solutions, 58% of threatened forests in Southeast Asia could be protected through carbon credit schemes.
The region contains 15% of the world’s remaining tropical forestsmuch of this is seen in Indonesia, which has experienced higher deforestation rates than its neighbors in recent years.
Within the framework of the COP27 UN climate change conference held in Sharm El-Sheikh, Egypt, Indonesia has started discussions with Brazil and the Democratic Republic of the Congo to establish a strategic alliance on nature protection. “OPEC for Tropical Forests”.
The power of the future
This is what the International Energy Agency (IEA) predicts Excluding China, renewable energy capacity in the Asia-Pacific region will increase by 360 GW, or 70%During 2022-27, solar will account for more than two-thirds of new deployments.
This energy transition could help some emerging markets in the region become major exporters of solar energy.
The demand is partially supported by Singapore, which wants to import up to 4 GW of low-carbon electricity by 2035, equivalent to 30% of its demand. Indonesia has announced several new solar megaprojects in 2022.
Although Indonesia has only 210 MW of installed solar capacity, one of the smallest solar footprints in the world, it has begun planning projects with up to 17,000 MW. All but 3,300 MW are destined for export, indicating significant potential for future renewable energy projects for the domestic market.
For his part, In October 2021, Malaysia banned the export of electricity from renewable sources with reference to national needs.
Although a severe drought in China will cause production to decline in 2022, adoption of pumped hydropower technology can increase the role of hydropower in the global energy complex. This low-cost, low-carbon source of electricity is expected to become widespread in the region. According to the IEA forecast, 75% of new hydropower capacity will come from large-scale projects in Asia and Africa.
In August, India pledged $2.4 billion to develop the West Seti and Seti River hydroelectric projects in Nepal, with a total exportable capacity of 1.2 GW. Another major hydropower project completed this year, the 720MW Karot project in Pakistan, was financed by China, although the level of China’s Belt and Road Initiative funding has since declined markedly in the region.
Biogas is another energy source with significant potential to boost the green circular economy In the Asia-Pacific region, the region could produce up to 200 million tons of oil equivalent by 2040, according to IEA estimates in 2018. The region also has the lowest biogas production costs in the world thanks to cheap raw materials and a favorable government. policy and practice.
A number of notable biogas projects were accelerated in 2022.
in October, India has launched the largest biomethane plant on the continentt Sangrur, Punjab, thanks to a $27 million investment from German bioenergy company Verbio. The plant has eight drilling rigs with a capacity of 10,000 cubic meters.
In April, Indonesia’s national energy company Pertamina and Japanese engineering firm JHG Holdings signed an agreement to convert methane gas from palm oil production into biofuel.
Meanwhile, Aurora, which is funded by the Philippine Ministry of Science and Technology, announced in August that it will build a 20 cubic meter rig in Baler.
Partly due to the impact of this year’s floods in Pakistan, the biggest achievement of COP27 was the establishment of a financial mechanism for compensation for vulnerable countries. loss and damage caused by natural disasters due to climate changealthough the details of this mechanism are not yet known.
Similarly, several emerging markets have been exploited creative climate finance solutions helping them meet their emissions obligations.
The aim is to help Indonesia, Who will preside over the G20 in 2022, to stop burning coal. The archipelago nation is the eighth largest emitter of greenhouse gases in the world, coal generates about 60% of its electricity and serves as the main industry in some regions.
November 15 was the opening of the G20 summit held in Bali Just Energy Transition Partnership (JETP)a $20 billion deal to decarbonize Indonesia’s economy, backed by all G7 member states, as well as Denmark and Norway.
In 2022-27, the use of renewable energy sources in the country is expected to increase four times Compared to 2016-21 levels, solar and hydro account for most of the new growth. The introduction of competitive auctions by presidential decree in September 2022 has the potential to significantly accelerate deployment.
Similar JETPs for Vietnam and India are modeled after the $8.5 billion deal to reduce coal use in South Africa, launched in November 2021.
This article originally appeared on Oxford Business Group. Read the original.