Published 1/24/20
Reading 1 Min.
Published 1/24/20
Reading 1 Min.

2019 was a difficult year for Asia; the Sino-American trade war, geopolitical uncertainty and Brexit produced a damp squib rather than the hoped-for bang. If this climate proved less than propitious to economic growth, however, Asian economies remained surprisingly stable, thanks in large part to the assistance given by the Fed to all central banks in the region. Yet what does 2020 hold for Asia’s economies?

Listen to our experts from the APAC region as they discuss how 2019 has set the stage for 2020, as well as what we can expect to see across the region:

  • Alicia Garcia Herrero - Chief Economist, Asia Pacific
  • Trinh Nguyen - Senior Economist, Emerging Asia
  • Jianwei Xu - Senior Economist, Greater China
  • Kohei Iwahara - Senior Economist, Japan & Pacific
  • Gary Ng - Economist, Sectorial Research, Asia

Click on the podcast to discover the analysis:

Natixis Podcasts RESEARCH


Given the constantly evolving geopolitical situation, it is difficult to predict with any confidence exactly what 2020 holds for Asia’s economies.

If the Brexit impasse appears to have been broken and the trade war seems to be reaching its conclusion, the market impact of the recent escalation of geopolitical tensions in the Middle East remains unclear.


Despite this, a broad economic contraction can be discerned with relative confidence.

When viewed through a cyclical prism, the outlook appears to be positive. A softening dollar and 2019 Fed rate cuts will help buoy Asian economies over the coming year.

From a structural perspective, however, the outlook can be considered as more nuanced (south-east Asia partially excepted):

  • In China, rising strategic competition with the US, democratic change and poor domestic demand are likely to slow Chinese economic growth and consequently that of other Asian countries as well.
  • Consequently, China’s credit risk will likely increase in 2020. Smaller banks, the main lenders to small businesses, will struggle to get liquidity, leading to more state takeovers of small banks. The gap in financial health between private and state-owned firms is also likely to widen, an increasing percentage of defaults coming from the private sector. State-owned defaults are also set to increase as the Chinese government struggles to support all state-owned firms in worsening economic conditions. Sectors with slow price growth will come under particular stress.
  • Japanese corporates will do well compared to their Chinese counterparts. However, consumer tax increases, slowing global trade and incomplete structural reform will hit the economy, which is set to deteriorate further despite the upcoming Olympic Games.