According to a report published on February 10, analysts of Forester predict a slowdown in consumption technological goods and services in China. They believe that the growth of the Chinese technology market will increase from 9.7% in 2021 to 8.2% in 2022. For the first time, Vietnam, India and the Philippines could thus have stronger growth than China in this segment.
Southeast Asian countries are in great shape
This slight slowdown is the consequence of the policy “zero Covid” imposed by the Chinese government. Analysts believe that the vaccination rate, pandemic management strategies, governments’ digitalization efforts, as well as measures to speed up telework play a role in the outlook for the sector. In 2021, countries with at least 60% of the population immunized had growth levels above their annual technology spending growth rates from 2015 to 2019.
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According to Forester, the Philippines (+9.1%), Vietnam (+9%) and India (+8.7%) are expected to see the growth of their respective technology market continue to progress in 2022. Malaysia and Indonesia are in the same dynamic with an estimated increase of 8% in 2022 and 7.1% for Thailand. Containment measures and border closures decided by China are likely to have a negative effect on consumption in 2022. As the pandemic evolves, the various policies to combat the spread of Covid-19 are showing their effects on the economy.
Chinese politics “zero Covid” responsible for this slowdown?
The analysts of Forester are categorical, they think that “The measures taken by Beijing will put downward pressure on domestic demand, which could lead to a more global economic slowdown”. The US sanctions (which Beijing is currently trying to circumvent) also have their responsibility in this upcoming review. For Huawei, China’s biggest smartphone maker until a few years ago, sales fell 68% year-on-year. It was Apple that ended the year as the favorite manufacturer of Chinese consumers.
Further slowdowns are to be expected according to the report of Forester. Factories continue to close and face supply chain issues that “weaken the outlook for consumption growth”. The report says the biggest risks to growth are supply chain bottlenecks and continued high inflation. This is why the government has decided increase spending on research and development by 7% each year from 2022.