Opinion: With world economy at crossroads, NZ should look to Asia

In a recent speech at the China Business Summit in Auckland, trade expert Andrew Tan highlighted the far-reaching and ongoing consequences the Covid-19 pandemic and spoke about the world economy being at a crossroads, one made all the more uncertain by increasing geo-strategic rivalry between world powers. He said during such times, small countries reliant on the rules-based order such as New Zealand and Singapore would be remiss not to seek opportunities to cooperate. This article summarises Tan's speech, with the full speech available for downloading. The Asia New Zealand Foundation provided funding to bring Tan to New Zealand to speak at the summit.
Andrew Tan standing with the Foundation's executive director Simon Draper and director research and engagement Suzannah Jessep

Andrew Tan with the Foundation's executive director Simon Draper and director research and engagement Suzannah Jessep

Tan noted that globally, covid recovery remains fragile, particularly in the wake of the protracted conflict in Russia-Ukraine, and rising geopolitical tensions between US and China, as well as broader macro-economic uncertainties. Just as the pandemic put the spotlight on the lack of vaccines and medical equipment as well as supply chain bottlenecks, the ongoing conflicts and tensions have cast the spotlight on food, energy security and commodities.

The IMF is now forecasting a 3 percent growth for the world economy over the next few years, the lowest medium-term forecast for the last 30 years. Even as policy makers are grappling with the real macroeconomic demand and supply aftershocks, Tan noted that inflation and climate change are presenting new inter-related challenges. Without growth, jobs and investments, no economy can sustain itself, much less deal with the seismic shifts underway. The stakes are therefore high for everyone.

These are the tough questions which countries cannot solve in isolation. While the world has benefited from the liberalization of trade over the last few decades, Tan said that unfortunately it has also widened the gap within and between countries.

The heightened insecurity among nations arising from their perceived and/or real inability to compete amidst widening income gaps is feeding into the geopolitical arena where we now see almost every country bringing trade, foreign policy and national security into sharper focus.

Markets are trying to adjust to this new normal, and hedge against US-China competition, by reducing their concentration risks and/or seeking to diversify their supply chains to other parts of the world, be it reshoring, near shoring or friend-shoring. The latest terminology is not decoupling, nor de-risking, but “diversity” of supply.

All eyes are now on Asia, the region at the epicentre of all these developments. Here, Tan accentuated the region's pivotal role in global transformations. He highlighted Asia's continuous growth, driven by nations such as China, India, Malaysia, Indonesia, and Vietnam, and how rapid urbanisation and growing connectivity is attracting investors and driving a new private-sector led development agenda.

Tran underscored the potential of collaboration between countries like New Zealand and Singapore. He proposed that they act as bridges to foster understanding and cooperation among major powers. Such partnerships would ensure stability, uphold a rules-based international regime, and promote free trade agreements. Additionally, he encouraged the utilization of Singapore as a springboard for New Zealand businesses to access the region's growing markets.

Tran's speech emphasised the critical juncture at which the global economy stands, necessitating resilient approaches, partnerships, and cooperation to navigate uncertainties and embrace opportunities in a rapidly transforming world.

Andrew Tan was formerly managing director with Institutional Relations, Strategy Office and Enterprise Development Group of Temasek International. Prior to this, he worked in the Singapore Government for 28 years in a variety of key roles.

He held senior positions in a number of Singapore's ministries, including Defence, Foreign Affairs, Information, Environment and Water Resources and in the Prime Minister’s Office as the Principal Private Secretary to Minister Mentor Lee Kuan Yew.

He was also the chief executive officer of the National Environment Agency (NEA) from 2009-2013 and Founding Director of the Centre for Liveable Cities (CLC) from 2008 to 2010, where he remains a Fellow.