2022 Economic Outlook to be defined by digital resilience and a return to the ‘experience economy’

According to the report, uptick in leisure travel recovery as international travel opens up, with medium and long-haul flights to gain ground in 2022. While travel restrictions impacted the slow rate of recovery across the region in 2021, with only a few markets in Asia Pacific witnessing a rebound in domestic travel – such as Australia, who saw trips returning to nearly 69 percent of pre-pandemic levels – the view for 2022 is optimistic across the region.

In addition, excess savings in the developed economies of Asia Pacific are a source of strength in consumption in 2022 and beyond. A faster scenario for spending excess savings would mean a two percentage point acceleration in consumer spending growth for several markets in 2022, including Australia, New Zealand, Japan, and Korea. Globally, consumer spending of built-up savings could contribute an additional three percentage points to global GDP growth in 2022 as pandemic restrictions ease.

The report also pointed out another important factor to the global economy: the digital. 20 percent of the digital shift in retail stays put – reshaping how and what consumers buy. E-commerce subscriptions gained traction in 2021 as nearly 88 percent of countries across 32 markets saw a surge in subscription services compared to the previous year – on average, retail subscription share of total spend increased by a factor of 1.25 from 2020 to 2021 across six Asia Pacific markets. Notably, car companies, virtual workout partners, bike rentals and pet services are among a slew of businesses benefitting from this model.

Moreover, household spending on services in Asia is expected to accelerate while goods demand also stays robust in 2022. Whilst supply chain disruptions continue to linger on, prolonging high logistics costs and a surge in global commodity prices, exports remain a major positive factor for the region.

The experts also claimed that risks remain with the potential to disrupt the global economy. New COVID variants like Omicron pose the biggest immediate risk, however there are identified additional risks that have the potential to derail recovery, including a sharp recalibration of housing prices, a surge in oil prices, and fiscal cliffs in advanced economies.

“Although the past year remained shrouded in uncertainty, we are optimistic about the year ahead, and expect 2022 to be the year of travel recovery for Asia,” said David Mann - Chief Economist, Mastercard AP & MEA. “Whilst the recovery trend across the region may be non-linear, we anticipate pent-up demand and savings will finally be released by consumers, evidenced by the recovery of ‘out-and-about’ categories such as apparel and beauty. The continued strength in e-commerce, and pandemic categories such as home improvements and hobbies will also be bolstered by a steady rise in the subscription economy, painting a positive picture despite the lingering threats of new variants, inflation and supply chain disruption.”