Developments in Asia central to A.T. Kearney predictions for coming year

11 December 2018 5 min. read

The global strategy and management firm A.T. Kearney has released its end-of-year predictions for 2019, with Asia forecast to play a central role in world affairs in the coming year. 

As per recent tradition, the global strategy and management firm A.T. Kearney – one of the leading strategy consulting firms in the Asia Pacific region – has released its annual end-of-year predictions for the year ahead, with Asia featuring front and centre in the pivotal world developments forecast to occur over the coming twelve months; an intensifying trade spat between the US and China at the top the list.

Elsewhere, the blossoming relationship between Chinese and Russian presidents Xi Jinping and  Vladimir Putin is predicted to be the world’s most consequential ‘bromance’, while recently imposed limitations on the import of plastics enacted by China and several Southeast Asian countries will spark renewed innovation in response to the growing internationl waste management crisis. Nations in Asia, too, will be both the primary culprits and hardest hit due to a wide-spread sand shortage.Growing China-Russia trade tiesNow in its third year, these are just some of the ten key predictions for 2019 laid out by A.T. Kearney’s Global Business Policy Council, of which the respected think-tank believes will have an important near-term impact on the global business environment individually, and could signify potentially profound shifts when taken together. The predictions paint a picture of geopolitical uncertainty along with the world’s deepening resource management challenges acting as an impetus for technological innovation.

Broadly, the other predictions concern; new sulfur regulations in the global shipping industry; a bitcoin-led maturation of the cryptocurrency market, the proliferation of new products to address a global anxiety epidemic, including ongoing developments in the commercial cannabis market; an escalating emerging markets credit crisis (which will impact credit from China); rising connectivity in Africa, and; exoskeletons giving rise to a real-life ‘Iron Man’.

Geopolitical landscape

As to the major predictions centred on Asia, A.T. Kearney expects that, although the US and China have recently agreed to resume negotiations to resolve their escalating trade tensions – now worth a collective $360 billion in exclusive tariffs – the short ‘ceasefire’ is unlikely to last, and will in fact continue to intensify. “The (US) administration may even impose tariffs on an additional $267 billion of Chinese goods,” states the report.

While an ongoing trade war may provide a boon for the economies of Southeast Asia, thanks to an international supply-chain rethink, the report expects that Beijing will in response to the trade threats look to reduce its economic dependence on the US and secure alliances elsewhere – in particular, a budding relationship with Russia. While Jinping recently giving Putin a ‘best friend’ medal may appear sweet, a closer alliance between two of the world’s three most influential superpowers obviously comes with some serious geopolitical implications.

Here, A.T. Kearney charts the rise in bilateral trade between the countries already underway since the turn of the century, and notes China’s recent participation in Russia’s largest war games exercise since the end of the Cold War. The firm expects a continuation; “Xi and Putin will deepen their relationship even further in 2019. They will become more vocal critics, both together and separately, of US trade policies and other ‘America First’ actions.’Timeline of China-US trade war tariffsAlso with Asia at the centre, two large-scale resources and management issues with far-reaching consequences; the global garbage crisis which emerged last year, and the emerging global sand shortage. As to the former, which was triggered by limitations placed on recycled plastic imports into a number of Asian countries, the firm predicts that as an effect of the crisis unsustainable waste management practices will become too difficult to ignore – in turn leading to a range of innovations around the world.

On the other hand, the global shortage of sand – caused in part by the unprecedented levels of construction in China and India – comes with no happy upside, leading instead to rising prices and in turn greater illegal activities, worsening environmental impacts, and a significant strain on the construction industry – particularly in emerging and frontier markets such as Vietnam, which has experienced a 200 percent price hike for sand during this year alone.

According to the firm, the issues surrounding the sand trade could altogether lead to the slowing or cancellation of some projects, with troubling economic ramifications. “Singapore, the world’s largest sand importer, will face greater scrutiny and delay of development projects as global attention to the issue rises. The country is already subject to sand export bans from Vietnam, Indonesia and Cambodia for alleged long-term participation in sand smuggling.”