Our Predictions for 2021, Following a Year That Defied Prediction
January 19, 2021
If the year just passed had a lesson, it must be the futility of predictions. What seasoned prognosticator in 2019 foresaw a viral pandemic that would derail the lives and prosperity of millions of people around the world in 2020? What seer saw in their crystal ball the dramatic and violent chaos that would unfold while members of the U.S. Congress met on Capitol Hill to certify the election of Joe Biden as the next president? The world expressed shock and dismay. These events were as unforeseen as they were momentous.
Yet, to set goals, to devise strategies—to live our lives—we must look ahead, and after a year of events that changed development trajectories throughout Asia, it’s again time for our country representatives to take stock of the future that fortune has handed us and offer their predictions of the stories that will dominate the news from the Asia-Pacific in the coming year. Here, in a spirit of humility and cautious optimism, are perspectives from our experts on a still-young 2021.
Already reeling in 2020 from the impact of Covid-19, a deteriorating economy, and rising insecurity, Afghanistan enters 2021 with a top priority of reducing and eventually ending the violence by securing a peace agreement with the Taliban. Peace negotiations between the Afghan government and the Taliban resumed on January 5 in Qatar, and these talks are expected to determine Afghanistan’s future, including the country’s political system. More than ever before, political actors involved in these negotiations must act resolutely to ensure transparency in the peace process and to protect the rights and freedoms that Afghans have gained in the past two decades.
Successful implementation of a future peace agreement that will in all likelihood end the foreign military presence in the country will significantly depend on political and financial support from the international community. With an already weakened and largely donor-dependent economy, Afghanistan can become a peaceful country only with a renewed commitment to peace and development from all its political actors, and with long-term support from the international community.
As it did in the rest of the world, the year 2020 in Bangladesh began with the anxiety of a looming pandemic that would go on to wreak havoc on the Bangladeshi people and economy. Many of us in Bangladesh lost near and dear ones in that terrible year, which also exposed the weaknesses in the nation’s healthcare system.
Fortunately for Bangladesh, the economy is showing some resilience, and it is now widely believed that, after this temporary setback, it will return to a rising trajectory in 2021 much more quickly than anticipated.
In the civic, political, and media spheres, there are persistent concerns about shrinking civic space, limited political dialogue, and media sensitivity. Bangladesh will celebrate its 50th year of independence this year, with fervent hopes for the continued growth of the nation and the well-being of its people.
Cambodia won recognition as a country that adopted consistent and sustained measures to contain the spread of Covid-19 in 2020, and it reported a total of just 380 cases and no deaths. Economically, however, the tourism, construction, and manufacturing sectors were all severely affected, and Cambodia’s economic growth fell sharply, from consistent levels over the last decade of 7 percent per year to a projected decline of 1.9 percent in 2021.
In the coming year, Cambodia will prioritize efforts to the reinvigorate the economy, helping the country to rebound and ensure that citizens living at the margins do not fall back into poverty as the result of the pandemic. Cambodia is also poised to take on a more active role in the ASEAN region when it assumes the chair of ASEAN in 2022, and 2021 will be a year of preparation to enable Cambodia to shoulder this position of leadership.
For China, 2021 marks the first year of its 14th Five-Year Plan, in which a central pillar of economic development is “dual circulation”—an economy anchored by a smoothly circulating domestic supply chain while maintaining sound interactions with the international market. The Chinese economy continues to face structural transitions from manufacturing to services, driven by technological innovation, green growth, and an aging population.
The year 2021 marks 50 years since the PRC rejoined the United Nations, and its 20th year as a member of the WTO. While China remains an ardent advocate for multilateralism and is set to play an ever-greater role in global governance, it will face grave challenges in 2021 arising from the complex interplay between the Covid-19 pandemic, the global economic recovery, and the changing geopolitics of U.S.-China competition. How the new U.S. administration handles U.S.-China relations in its first year in office, on issues such as trade and climate, will be consequential not only for both countries, but also for China’s relations with its other key trading partners in Asia and around the world.
The social, economic, and political upheaval caused by Covid-19 in 2020 will no doubt leave lasting scars globally, but amid the attendant gloom, fear, and uncertainty, the world and humankind did find ways to fight the pandemic together. As we enter 2021, India is better placed because of the sharing of resources and collective learning with the global community that it consciously embraced.
On the world stage, India in 2021 will play a critical role in the large-scale production of vaccines, and many Indian pharmaceutical and research institutes have partnered with global companies to support this effort. The Serum Institute of India is producing the Oxford-AstraZeneca vaccine. Hyderabad-based Biological E has made a deal for the shot being developed by a subsidiary of Johnson & Johnson. Australia’s Griffith University has partnered with Indian Immunologicals. India has the technical and operational capacity to produce at scale and at lower cost, making it a key partner for low-income and less developed countries, and it will be supplying 100 million doses of vaccines to middle-income countries to ensure that distribution is not biased towards wealthy nations.
At home, India must seek this same degree of equity as it sets out to vaccinate its own citizens. The nation has ramped up its vaccine storage and distribution systems across the country, but it must still work to ensure that last-mile distribution is equitable, efficient, and conducted according to the priority categories defined by global health protocols.
On the economic front, getting the economy back on track will be challenging. The IMF projects that India’s per capita GDP will need at least three years to return to prepandemic levels. The government has rolled out various economic stimulus packages, but their actual impact on economic recovery is not yet tangible. Access to and utilization of the stimulus package by the target beneficiaries will be critical.
Finally, India is redefining its political and diplomatic engagement in the neighborhood and beyond. The positioning of India as a key partner in the Indo-Pacific region by the United States and through the Quadrilateral Security Dialogue is gaining greater credence, and just-declassified U.S. documents on the Indo-Pacific see India as a “net security provider” and an intelligence-sharing partner.
In its diplomatic and foreign policy outreach during the pandemic, India has sought to portray itself as a responsive partner for countries seeking assistance or support. India must play to its own strengths and engage with countries on the basis of shared values of democratic governance and mutually beneficial economic relationships. It should not be driven by the need to counter or replace the other Asian giant, China.
Indonesia’s main challenges in 2021 are much the same as other countries’: curbing the Covid-19 pandemic and promoting economic recovery. The new year arrived as the country faced the worst of the pandemic so far, which many attributed to the government’s reluctance throughout 2020 to enforce stricter remedies. President Joko Widodo’s vision of strong economic growth has continued to color the government’s pandemic response, and the repercussions have been evident in the number of cases, the positivity rate, and the number of deaths.
As in the president’s first term, investment and economic growth will remain paramount in this administration. The government’s new legislative strategy, the so-called Omnibus Law, deregulates investment at the cost of local control, labor protection, and environmental agendas. The president has expanded his political coalition by folding his rivals from the 2019 elections into his cabinet, effectively reducing opposition in the House of Representatives to 25 percent. The nation has seen multiple movements by religious conservatives in the last few years, emboldened by sympathetic or opportunistic politicians, but this year the tables have turned. With its base secured, the government clamped down on the leading group in this opposition, the Islamic Defender Front, and declared it illegal.
While some responded favorably to the move, many questioned whether the government had breached the right to assemble. Democracy activists are rightfully wary of how this will set the tone going forward, particularly because the laws are vague and can be used to silence critical voices. Reports show that criticism and public protests against the Omnibus Law, for example, were met with almost 6,000 arrests and nearly 100 people charged with crimes ranging from disrupting public order to spreading misinformation. With 40 percent of Indonesians now stating that they do not feel secure voicing their opinion in public, freedom of expression is clearly at stake.
Meanwhile, the government will need support from all sides to battle the pandemic. Currently, less than half the public states firmly that it will take the vaccine, but this may change as the vaccines become available and more people begin to take them. Indonesia must come together as one to address this crisis, with economic and health priorities synchronized and with room to express differences without fear of reprisal. Civil society will play an important role linking the marginalized with public services, as it has since early in the pandemic, and filling the gap left by the near absence of political opposition by providing honest criticism and engagement with the government.
Covid-19 will eventually become a memory, but in the Koreas the consequences will linger. A highly unequal, “K-shaped” recovery is occurring, with starkly opposite realities between North and South Korea at one level, and within South Korea at another.
North Korea begins this year facing unprecedented health and economic challenges, including signs of an impending famine. The country is confronting a dreadful combination of crop failures and market failures. Its borders with China are shut, severely impacting formal and informal trade networks that helped fill food production and distribution gaps in the past. Calibrating international restrictions to allow humanitarian aid is especially important now as the regime focuses on domestic concerns. To balance this with international security concerns, denuclearization objectives could be replaced with a more realistic goal of freezing North Korea’s nuclear programs.
On the southern side of the border, South Korea’s successful response to Covid-19, drawn from past lessons, won global admiration in 2020. The pandemic accelerated existing trends, both positive and negative: Leading companies such as Samsung and Hyundai have emerged stronger and are well positioned to benefit from a global economy hungry for innovations (such as a rumored Hyundai-Apple partnership for autonomous vehicles). The Korea Composite Stock Price Index, the KOSPI, has hit record highs in January, as foreign investors and millennials flock to Korean stocks. On the other hand, the pandemic has highlighted the vulnerabilities of small businesses that have been forced to shut down—increasing already-high youth unemployment—and the growing vulnerabilities of the elderly related to income, social isolation, and health. Rising housing prices continue to exclude new entrants, effectively narrowing the path to wealth-building for the younger generation.
Externally, the new administration in Washington will likely work to strengthen the U.S.-ROK alliance with a more reasonable agreement on defense cost-sharing. There will be pressure for South Korea to choose sides in the U.S.-China geopolitical rift, amid competing initiatives such as the UK-led “D-10” alliance of democracies and China’s Regional Comprehensive Economic Partnership. South Korea will continue to hedge its bets between the United States and China unless a conservative government more closely aligned with the United States emerges from presidential elections in early 2022. Friction with Japan will persist in some form due to unresolved historical disputes, while Seoul will continue to expand its trade with Southeast Asia. Unless a crisis occurs, the new U.S. president is less likely than his predecessor to prioritize the relationship with North Korea, preferring a more bottom-up approach and working-level talks.
Lao P.D.R. is one of a small handful of countries that has effectively kept Covid-19 at bay. While it avoided a health crisis, however, the measures to contain the virus have led to an economic crisis and a precipitous drop in state revenues that leave little room for error in the coming year.
Despite these constraints, 2021 will be a year of transition. The nation will hold elections in February for the next five-year legislative term in both the National Assembly and the Provincial People’s Assemblies. A new government and prime minister will be sworn in, and the ninth five-year National Socio-Economic Development Plan will be enacted. National transport connectivity will expand as new highways are completed and the long-awaited high-speed railway becomes operational along the north-south economic corridor.
But the main theme of the coming year will be recovery from the pandemic. This will happen by gradually reopening borders to restart the tourism industry and resume remittances from migrant workers abroad, while increasing trade and improving the ease of doing business. Small and medium enterprises will remain the main engine of the economy, with an increased emphasis on sustainable growth. If high-level discussions in the last months of 2020 are any indication, expect momentum to reduce the country’s reliance on natural resource exploitation and foreign loans, acknowledging the need to build back better with a greener economic foundation for the country.
Malaysia enters 2021 on a somber note, with record high Covid infections forcing a new lockdown, economic growth slowed by the pandemic, a national state of emergency, and an increasingly fragile government coalition led by an unelected prime minister.
Malaysians expected a snap election in early 2021, but King Abdullah Ahmad Shah declared a state of emergency on January 12—to run until August—which allows Prime Minister Muhyiddin to suspend parliament and sort out his conflicting political alliances. Politicians across the political divide must arrive at an amicable solution to the current impasse to provide the necessary political stability to lift the nation out of its health and economic crises.
Malaysia’s fiscal deficit is expected to widen to 6 percent of GDP in 2021. Unemployment could reach 5 percent, with a high percentage of university graduates underemployed. Economic growth, debt restructuring, and coordinated macroeconomic actions will be necessary to ensure a return to economic stability. The gig economy and tourism hold promise, but the country needs to sort out the mismatch between skills and labor-market demands and accelerate its Shared Prosperity Vision 2030 to temper growing economic inequality and a widening digital divide.
Thankfully, the government’s 2021 budget, the largest federal budget to date, is generous on social protection measures, which are much needed to address increasing mental health issues, domestic violence, and job insecurity as the country enters lockdown 2.0.
Until the very end of the year, the story of Mongolia in 2020 was the dominance of the ruling MPP, the Mongolian People’s Party, in national and local elections and the country’s success at keeping the Covid-19 pandemic in check. These developments strengthened support for Prime Minister Khurelsukh, both within his party and among the general public, and put him in a strong position to complete the legislation needed to activate constitutional amendments made in late 2019 and to plan for the post-pandemic implementation of his ambitious vision for the Mongolian economy.
Unfortunately, this narrative was disrupted in mid-November by Mongolia’s first recorded case of local transmission of Covid-19. Despite a strong response that quickly rolled out extensive testing, temporarily closed businesses, and limited movement in the capital city of Ulaanbaatar and other affected provinces, there have been more than 1,000 cases of local transmission to date, and new cases are still being found daily. After an already difficult year of Covid-prevention measures, the effect of the lockdown on small businesses, and the economy overall, has been devastating.
With this turn of events, Mongolia, like so many countries around the world, enters 2021 preparing for the complicated task of balancing economic stimulus and policies to allow businesses to reopen with measures to slow the spread of the virus, all while working hard to secure access to a vaccine. Mongolia will also have a presidential election in June 2021, the first since the constitutional amendments that changed presidential term limits from two, four-year terms to a single term of six years. After the devastating economic impacts of the anti-Covid policies and the dispiriting durability of the new outbreak, this election will test the staying power of the MPP’s dominance.
Myanmar has weathered the global annus horribilus of 2020 relatively well, but significant challenges lie ahead in 2021.
Myanmar’s rates of Covid-19 cases and deaths were well below world averages, lockdowns and other restrictions were lightly enforced, and Aung San Suu Kyi’s government was popularly seen as managing the crisis well. But second-order effects of the pandemic are now rippling through the economy, and they will be felt in full in the coming year.
Myanmar’s November 2020 national elections took place in the shadow of the pandemic, but they saw a record high turnout and few election-day problems. The National League for Democracy won a landslide victory, and Aung San Suu Kyi begins her second term with a strong mandate, but there is also a perception that the clock is running, as the 75-year-old national icon is believed to be planning to step back from active politics by the end of this term: 2021 could therefore be a year for bold action.
Bringing national reconciliation to Myanmar’s many ethnic groups, and an end to the generations-long armed conflict, will be key to cementing her historical legacy, and she will make use of 2021 to reach out to ethnic political parties and restart the stalled peace process.
In this new term, the NLD will show more interest in the economy, as the low-hanging fruit of the reform period has been picked, and the government must make decisive moves toward deregulation and modernization. Administrative reform and decentralization will be crucial to delivering economic benefits to citizens, while devolution of power is necessary to realize the promised “democratic and federal state,” which could bring peace to this country that has known none since the founding of the modern state in 1948.
Meanwhile, the Rohingya issue dominates international perceptions of Myanmar. The human toll of displacement will persist unabated through 2021 and continue to stain Myanmar’s transition from dictatorship to democracy.
The Supreme Court of Nepal is poised to write headlines in 2021 when it delivers its verdict on Prime Minister Oli’s December 20, 2020, dissolution of parliament in the face of an intense internal party rift. The decision may determine the prospects for a constitutional crisis in the world’s youngest federal democracy.
By many measures, Nepal’s 2015 constitution has fulfilled its promise of creating structures to bolster the nation’s stability, which is the greatest it has been in over two decades. In the court’s hands now are other key elements of stability that are needed to address the multiple crises triggered by the pandemic, including a recession that has cut economic growth to a feeble 0.6 percent.
Regardless of the court’s decision, the year ahead won’t be smooth for Nepal’s fragile state. The heroes of local and provincial government will remain unsung in 2021 as they navigate new or renewed subnational political alliances in the face of rising poverty and unemployment, growing gaps in education, secondary health crises caused by the pandemic, and many other challenges in this natural-disaster-prone Himalayan state.
Civic space for constructive participation in politics and governance will continue to suffer from the fear of retribution and the confusion of self-censorship, along with a next generation of civil society still struggling to find its footing and its public voice. In international relations, Nepal will continue to punch above its weight as its two dominant neighbors, India and China, maneuver for influence in a country that is of strategic national interest to both.
The year ahead presents more questions than answers for Nepal, but like a child gazing into the eyes of the lion, we feel certain that it will be, at the very least, eventful.
Pacific Island nations face a mix of opportunities and challenges in 2021. The challenges, multifaceted and growing in scale and urgency, include governance constraints, geographic isolation, extreme vulnerability to climate crises, and gender inequalities manifested in high levels of gender-based violence and limits on women’s economic participation and public voice.
While the Covid-19 pandemic has largely spared the Pacific Islands from the severe medical crises experienced elsewhere, most of the region has been locked down since March to protect fragile public health systems and vulnerable populations. The lockdown measures, along with strict travel restrictions, have had severe economic consequences—especially for economies that rely heavily on tourism—and the downstream effects on retail, food service, remittances from abroad, and commodity prices have added to the economic pain. Collective regional efforts such as the Pacific Humanitarian Pathway—an expedited corridor for urgent humanitarian assistance—and support for labor migration will be crucial to the region’s recovery.
Although there is heightened geopolitical interest in the region, the Pacific Islands Forum has underscored two strategic priorities: the vital importance of Pacific Islanders framing their own development agenda, and the sustainable management and development of the “Blue Pacific Continent” as a common resource in the face of environmental degradation and climate change.
Major events that will shape the Pacific Islands in 2021 include: elections in the Federated States of Micronesia (March), Samoa (April), and Tonga (November); new leadership for the Pacific Islands Forum with the election of a successor to Dame Meg Taylor, the current director general, in February; and the roll-out of Covid vaccinations, with a priority on vulnerable populations and frontline responders, seasonal migrant workers, and tourism workers.
Climate change and environmental management, the most serious issue facing the Pacific Islands, will be a significant focus of the highly anticipated 2050 Strategy for the Blue Pacific Continent, which the Pacific Island Leaders forum will launch in 2021.
Falling oil prices, rising remittances, and special assistance packages from multilateral agencies, including some debt rescheduling, helped to give Pakistan a favorable balance of payments and a stable rupee in 2020, while the use of limited, “smart” lockdowns kept the economy largely open during the pandemic. Pakistan was also able to rely on Ehsaas, its existing national social protection program, to deliver expanded relief funds to 12 million families through the Ehsaas Emergency Cash program. Together, these factors have kept Pakistan from bearing the full brunt of the pandemic.
As the pandemic continues into 2021, however, it has sharply reversed the previous decline in the poverty rate, further damaged already fragile human development indicators, and brought looming clouds of political instability. This will be a year not just for reckoning the impact of Covid-19, but for recalibrating: ensuring that essential healthcare and other basic services are made stronger; that jobs are created and protected, including among women and MSMEs; that social cohesion, inclusion, and community reliance are recognized and promoted as essential values; and that the most vulnerable are provided with food security and recovery programs. More than ever before, 2021 calls for coordinated public and private responses to put Pakistan on a realigned path to recovery.
The shocks from Covid-19 will continue through 2021 for the Philippines, shaping the social, economic, security, and political landscape. The country has fared relatively well in health outcomes through the pandemic, with cases at manageable levels of roughly 2,000 per day, partly as a result of a longer and more comprehensive lockdown than any of its neighbors. Vaccination, however, is not projected to reach a significant portion of the population until mid-2022.
The Philippine economy shrank by more than 8 percent in 2020, the worst result in ASEAN. The recovery in 2021 will be slow, hampered by continued Covid-19 restrictions, unemployment above 10 percent, large numbers of people leaving the job market, declining remittances from abroad, and the struggles of previous growth industries such as tourism. The country also risks serious declines in education outcomes, with schools closed since March 2020 and online schooling likely to continue through 2021.
Continued conflict between government forces and remnants of the communist New People’s Army and small numbers of ISIS-aligned groups in Mindanao will dominate security concerns. The current equilibrium with China will likely continue in the West Philippine/South China Sea, though engagement on these issues by the incoming Biden administration in the United States will be closely watched from Manila.
National elections are scheduled for May 2022. President Duterte remains popular, but since the Marcos era no President has been able to shepherd their chosen successor into the Presidential palace. Whether Duterte can buck history will depend in large part on whether the government is able to step up responses to the myriad impacts of Covid-19.
Sri Lanka and Maldives
Sri Lanka heads into 2021 struggling to keep its head above water amid looming debt obligations, weak government revenue growth, rising poverty, and simmering ethnic tensions. Triggered by the Covid 19 pandemic, Sri Lanka in 2020 experienced one of its worst-ever recessions. Drivers of jobs and growth like tourism and the apparel sector took a sizeable hit. Reducing the economic hardships of a significant part of the population will be a major challenge for the cash-strapped government. However, a gradual recovery is expected in 2021 supported by strengthening demand for exports.
The new government, voted into power in a landslide in August 2020, was credited with containing the first wave of the pandemic through strict lockdown measures and effective contact tracing. But an ongoing second wave has now brought an alarming surge in both infections and fatalities. The government’s ad hoc measures to revitalize tourism and keep the economy functioning—permitting groups of tourists to enter the country without restrictions and closing small streets and neighborhoods instead of a full lockdown—are clearly not helping the situation. 2021 will thus be a test for Sri Lanka’s government, with a failing economy, creeping militarization, dwindling public support, and floundering efforts to stem the spiraling health crisis.
Despite a challenging 2020, the new Maldivian government continues to undertake serious efforts to reform and revitalize democratic institutions and reestablish the rule of law after an unsettling political period leading up to 2018. However, the economic fallout from the Covid-19 pandemic has shed light on underlying social tensions, particularly between Maldivians and the significant number of migrant workers who have contributed to the robust economic development of recent years.
The pandemic will continue to be a significant challenge for the country in 2021, due to its heavy reliance on tourism, but the Maldives are better placed than most to create “travel bubbles” by adopting the “one island, one resort” concept. With the imminent arrival of a vaccine, there are many reasons for Maldivians to be optimistic about the year ahead.
Thailand will begin a long process of recovery in 2021.
Thailand’s strong track record in managing the pandemic is likely to bring an early return to quasi-normality, but the slow pace of vaccine acquisition may delay a full recovery until 2022. If the Thai government allows inoculated visitors to enter Thailand without quarantine, then the all-important tourism sector should begin to rebound by the third quarter of 2021, but it will probably take years to return to pre-Covid levels. As one of the worst-affected ASEAN economies in 2020, Thailand will feel acute pressure to find new areas for reviving growth in the post-Covid world.
The country’s political prospects will add further uncertainty to 2021 and could also complicate economic recovery. One critical concern for 2021 is: where do the political protests, which have roiled the capital since well before the pandemic, go from here? The protest movements gained considerable momentum in 2020 and do not seem likely to fade anytime soon. Do they continue to simmer at current levels, broaden into a more mainstream movement, or escalate towards a showdown with the authorities?
Thailand could benefit from the Biden administration’s renewed emphasis on alliances, but this could be offset by disagreements over democracy and human rights issues, especially if the protests intensify.
While Timor-Leste outshone most other countries in Asia in 2020 in its handling of the Covid-19 pandemic, there may be storm clouds on the horizon as the country heads to 2021. From May 2020 to December 22, the country had just seven confirmed cases of the disease, but in the waning days of the year a new spike started that has now brought 20 more, all imported. The government was quick to close borders and impose a stricter state of emergency, banning gatherings of more than 10 people and canceling in-person mass in this Catholic-majority country. Regular Covid surveys by The Asia Foundation showed that, prior to this most recent spike in cases, Covid-19 precautions such as regular handwashing and mask wearing had declined among the public from May to September. With a healthcare system severely short of capacity, the nation must hope that the public will heed the government’s advice and recommit to Covid-safe behavior.
On the political-economic front, the coalition government of Prime Minister Taur Matan Ruak of the People’s Liberation Party and President “Lu Olo” Guterres of the Fretilin party managed for just the second time in five years to approve the 2021 national budget by the deadline. While this may help to restart the fledging economy, which contracted by nearly 7 percent in 2020 and is heavily dependent on government spending, the government still faces major challenges in the year ahead, including a decline in oil revenues, which are the main source of government funds, persistent poverty and malnutrition, and, of course, the ongoing challenge of Covid-19.
For much of the final quarter of 2020, speculation abounded regarding the leadership lineup for the 13th Party Congress in January 2021. The ending of a December Politburo meeting ahead of schedule could signal either the selection of new leadership or a failure to reach consensus. Regardless of the results, however, maintaining the status quo of a mixture of policy pragmatists and party disciplinarians remains the likely outcome, as this offers the only solution to the combination of personal interests, conflicting approaches to domestic governance, and outward-facing diplomacy that has been a hallmark of Vietnam’s governance.
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