As the world’s economic power shifts, Asia stands at a crossroads. Economist Trinh Nguyen warns that unless emerging nations like Korea, India, and Sri Lanka act fast, through diversification, industrial reform, and institutional strength they risk being crushed by trade wars, energy shocks, and demographic decline.
Asia’s economic future is being shaped by a storm of internal pressures and global shifts. At a recent policy forum hosted in Singapore, Trinh Nguyen Senior Economist for Emerging Asia at Natixis offered a wide-ranging analysis of how countries must adapt to maintain growth in an increasingly fragmented world. Her talk, “Navigating the Uncertainty,” was part of the International Trade Fellowship, organized by the National Press Foundation and held at the Hinrich Foundation.
Nguyen emphasized the urgent need for emerging economies to rethink strategy amid global trade realignments, shifting power blocs, and rising geopolitical risk. She highlighted disruptions in foreign direct investment (FDI) flows and warned of trade turbulence, especially as countries like the U.S. adopt more protectionist stances.
The Trump-era tariffs on Southeast Asian goods marked a turning point, she argued. These measures designed to bring U.S. jobs back home sparked global economic nationalism. While South Korean firms benefited from FDI into the U.S., the deeper cost was domestic job risk in key industries like auto manufacturing and renewable energy. This exposed the vulnerability of economies overly dependent on foreign capital.
South Korea, in particular, faces a stark demographic reality. Its low birth rate limits internal consumption, pushing the need for export-led growth. Nguyen cited a Korean carmaker launching an IPO in India as a smart example of pivoting toward youthful markets. For Korea, she advised, the key lies in preserving domestic industrial strength while seizing global demand.
Shipping was another critical focus. Korea’s shipbuilding sector, long a pillar of its economy, has been strained by China – U.S. tensions. President Lee’s incoming administration will need to balance subsidies and access to American markets. Nguyen advocated for sector-specific trade diplomacy, targeting modest, tactical wins rather than sweeping deals to deepen U.S. market entry in areas where China dominates.
India, meanwhile, presents a contrasting path. By avoiding the China-led Regional Comprehensive Economic Partnership (RCEP), India signals a desire to remain cautious about Beijing’s rising influence. Instead, New Delhi is ramping up bilateral trade deals with Western powers. Its recent automobile sector tariff shifts align with this pivot. But India’s relationship with China remains complex marked by border conflicts, trade deficits, and security mistrust.
Nguyen noted that India’s measured approach reflects deeper fears of dependency. Yet, its growing industrial weight and engagement with the West show a clear intent to integrate globally without surrendering strategic autonomy. For New Delhi, the challenge is navigating geopolitical flashpoints while staying open to trade and tech collaboration.
Industrialization, Nguyen stressed, is the lifeblood of economic and national security. Drawing parallels with Iran, she warned that without a strong domestic base, countries risk collapse under external pressure. India’s push to industrialize is therefore a survival tactic especially given China’s military rise and rapid aerospace expansion.
Zooming out, Nguyen highlighted ASEAN’s struggles. Despite efforts to reduce tariffs, non-tariff barriers like inconsistent regulations and weak institutions continue to undermine Southeast Asia’s potential. ASEAN’s lack of unity weakens its ability to negotiate with major powers or fully exploit collective bargaining strength.
China’s growing role within ASEAN is undeniable. It’s shifted FDI from distant markets to its neighbors, consolidating economic influence. ASEAN countries, eager for Chinese capital, often act individually deepening ties without a unified strategy. This risks dependency without direction.
Nguyen’s message to emerging nations was clear: diversify or perish. Countries reliant on single sectors like tourism or energy are dangerously exposed to external shocks. While she didn’t directly analyze Sri Lanka, she implied the lesson applies broadly. A diversified base spanning infrastructure, tech, and manufacturing is the only path to resilience.
Governance also matters. Nguyen pointed to Thailand as an example: despite political chaos, its bureaucratic institutions have anchored its economy. Effective agencies like the civil aviation authority and finance ministry have insulated the country from deeper instability. Such structures are vital to long-term success.
Energy is another frontier. Countries dependent on a narrow mix like LNG or hydro risk collapse during droughts or market shifts. Vietnam’s hydro crisis shows the danger. Nguyen urged policymakers to invest in a balanced energy grid, backed by storage and diversification not just for climate goals, but as a geopolitical shield.
Ultimately, Nguyen urged pragmatism. The global trade shift from multilateral to bilateral deals demands flexibility and realism. Every country must adapt based on its strengths. For Asia, this means protecting critical sectors, innovating, and targeting export growth.
Economic decisions, she concluded, don’t happen in isolation. They are shaped by political survival, diplomatic leverage, and security anxieties. Whether it’s India hedging against China, or ASEAN states prioritizing sovereignty, strategy must be tailored to reality. A strong economy, in today’s world, is not just economically smart it’s politically essential.
