McKinsey – Asia on the cusp of a new era final

The authors assert that the current disruptions in Asia, both economic and political, could be triggers for a new era in which Asia will play a leading role. They note that similar periods of disruption have occurred in the past and have led to prolonged new eras with stability in the global economy and international relations, but also transformational change within that stability. During the most recent era, known as the Era of Markets (1989-2019), Asia's economies collectively emerged as a prominent player in the world economy, accounting for more than half of global metrics. This gives Asia the opportunity to influence and shape a new era, not just for its own economies, but for the world as well. However, despite its position of strength, Asia will face challenges in various domains. In terms of world order, Asia must navigate trade tensions and retain its commercially pragmatic model amid growing geopolitical tension. In the domain of technology platforms, Asia needs to shift from being primarily a technology manufacturer and consumer to becoming a technology creator. Demographic forces present challenges related to rapid aging in Asia's highest-productivity economies, requiring a shift in value chains and a boost in productivity. Resource and energy systems pose a dual challenge of meeting growing energy needs while reducing carbon emissions. Lastly, Asia needs to mobilize capital to continue its growth, improving capital allocation and resilience amid balance sheet stress. In conclusion, Asia is at the forefront of disruptive changes that may mark the beginning of a new era, and it needs to address these challenges in order to shape the future not only for its own economies but for the world as well.