Navigating Uncertainty: What Global Disruptions Mean for Youth Enterprises and Policy Priorities in Asia-Pacific

By Kelvin Sergeant, Senior Sustainable Enterprise Development and Job Creation Specialist, East and South-East Asia and the Pacific, International Labour Organization

The global landscape is entering a period of sustained volatility. Geopolitical fragmentation, macroeconomic instability, climate shocks, and labour market disruptions are no longer isolated risks. They are overlapping forces reshaping how economies function and how opportunities are distributed. The impact is not new to the countries in Asia-Pacific.

Many Asia-Pacific economies depend heavily on trade, global supply chains, and external demand. When multiple crises hit at once, countries face supply chain disruptions (e.g., semiconductor shortages, shipping delays), export volatility, especially for manufacturing hubs like Vietnam or South Korea, rising debt levels, particularly in developing economies and diverging recoveries.  Advanced economies stabilize faster, while smaller or tourism-dependent countries lag. This leads to a widening gap between resilient and vulnerable economies. Recent ILO estimates underscore the scale of this exposure. According to the the ILO's latest regional employment outlook, nearly 3 per cent of total employment in the region is linked to the United States through trade and supply chains, with manufacturing accounting for almost half of these jobs. The report also revised regional employment growth projections for 2025 downward from 1.9 per cent (38 million jobs) to 1.7 per cent (34 million jobs), largely due to trade-policy uncertainty.

For youth enterprises in the region, often more agile but also more vulnerable, this convergence presents both unprecedented challenges and unique opportunities. The question for policymakers is not simply how to protect young entrepreneurs, but how to empower them to become more resilient.

Geopolitical Fragmentation: Risk and Realignment

Rising geopolitical tensions are reshaping trade flows, investment patterns, and technology ecosystems. Global supply chains are becoming regionalized, and access to global markets is increasingly influenced by political alignment rather than pure competitiveness. For youth enterprises, this creates a dual reality. On the one hand, barriers to entry may rise due to regulatory complexity, restricted technology access, and shifting trade rules. On the other, fragmentation opens space for localized innovation, young entrepreneurs can step in to fill gaps left by disrupted global supply chains, particularly in areas like digital services, local manufacturing, and alternative logistics. Regionalization is reshaping not only trade and investment flows but also expectations around labour standards and responsible business conduct. As multinational firms diversify supply chains across countries such as Vietnam, Bangladesh, the Philippines and Indonesia, decent-work upgrading is becoming an important differentiator.

Youth enterprises may become key players in “resilience economies”.Localized, adaptable systems that should reduce dependency on fragile global networks. Governments therefore need to invest in cross-border digital infrastructure, ease regulatory burdens for startups entering new markets, and create neutral innovation platforms that remain accessible despite geopolitical divides. 

Macroeconomic Volatility: Surviving Uncertainty

Inflation spikes, interest rate swings, and currency instability disproportionately affect young businesses. Unlike established firms, youth enterprises often lack capital buffers and access to affordable financing. In many countries across the region, access to finance remains one of the most significant barriers facing young and early-stage enterprises. According to the World Bank, the Asia-Pacific region accounts for 52% of the total emerging market MSME financing gap, which is estimated at nearly US$ 2.5 trillion, limiting the ability of youth-led firms to scale, innovate, and withstand economic shocks. The financing challenge is compounded by labour-market realities facing young people in the region. ILO data show that 86.3 per cent of young workers in Asia-Pacific are in informal employment compared with 67.1 per cent of adults. Nearly half of young people aged 15–29 are self-employed, while around two-thirds are paid without a written contract.

Nevertheless, volatility also accelerates innovation. Economic pressure forces efficiency, encourages new business models, and drives demand for cost-saving solutions, areas where youth-led startups often excel.  Start-ups that can pivot quickly can become a defining competitive advantage. Youth enterprises that are digitally enabled and asset-light are better positioned to survive and even thrive.  The policy implication here is the need to expand access to flexible financing (e.g., revenue-based financing, blended finance), strengthen financial literacy, and build shock-responsive support systems such as emergency credit lines for small and youth-led businesses.

Climate Shocks: Crisis as Catalyst

Climate-related disruptions including extreme weather, resource scarcity, and environmental degradation pose direct operational risks to businesses, especially in vulnerable regions. Youth enterprises, often concentrated in informal or resource-dependent sectors, are particularly exposed.  However, climate challenges are also generating entirely new markets. Renewable energy, climate adaptation technologies, circular economy solutions, and sustainable agriculture are rapidly expanding sectors where youth entrepreneurs can lead. Under a sustainable energy scenario, the regional energy transition could create up to 14 million net new jobs by 2030, particularly in construction, electrical machinery and renewable energy manufacturing.

Youth enterprises are not only vulnerable to climate shocks; they are also potential drivers of climate solutions.

Governments and policymakers need to shift from treating youth as beneficiaries of climate policy to positioning them as innovators and implementers of climate solutions. This is particularly important because existing climate finance architectures often bypass local actors and youth-led enterprises that are closest to the challenges on the ground. Greater attention should therefore be given to locally led adaptation approaches and to strengthening national and subnational institutions that can channel climate finance towards youth-driven initiatives. Promising initiatives already demonstrate what this can look like in practice. The ILO's Ready for Business programme, implemented with AIESEC across Bangladesh, Cambodia and the Philippines, has equipped more than 765 young entrepreneurs with green enterprise skills.

Labour Market Disruptions: Redefining Work

Automation, artificial intelligence, and the gig economy are transforming employment. Traditional career pathways are becoming less predictable, and job security is declining, especially for young people entering the workforce.  The expectation of a single lifelong career is increasingly outdated. While concerns about job displacement are widespread, artificial intelligence is more likely to augment many jobs than fully replace them. Clerical and administrative occupations, many disproportionately filled by young women in ASEAN economies, face some of the highest levels of exposure to automation and AI-enabled transformation.

At the same time, disruptions can lower barriers to entrepreneurship. Digital platforms, remote work, and new forms of collaboration allow youth to create businesses with minimal upfront investment.

The distinction between “employment” and “entrepreneurship” is becoming increasingly blurred. Youth are increasingly engaging in hybrid livelihoods, combining freelance work, digital entrepreneurship, and informal activities.  We need to rethink labour and education systems. Policies should support lifelong learning, portable benefits, and recognition of non-traditional work.  The need for stronger social protection systems is particularly urgent in Asia-Pacific, where approximately 2.1 billion people remain without access to any form of social protection. With informality accounting for around 66 per cent of total employment, many young entrepreneurs and freelancers operate without adequate protection.

Entrepreneurship should be embedded as a core skill rather than treated as a fallback option. Enterprising work should also be recognized within the broader decent work agenda. Young entrepreneurs and freelancers need stronger awareness of rights at work, social protection, and responsible business practices, particularly as many will eventually become employers themselves.

Cross-Cutting Insight: From Vulnerability to Agency

Across all four trends, a common theme emerges: youth enterprises are highly exposed to systemic shocks yet uniquely positioned to respond with agility and innovation. The risk is that without targeted support, volatility will widen inequality—locking many young entrepreneurs out of opportunity. The opportunity is that with the right ecosystem, youth enterprises can become engines of resilience, inclusion, and transformation.

Meaningful youth engagement must go beyond consultation alone. Young entrepreneurs should be involved in the co-design of policies and programmes that directly affect their businesses and livelihoods. Without genuine participation, there is a risk that youth engagement becomes symbolic rather than transformative.

Enabling Youth-Led Resilience

To harness this potential, policymakers should prioritize:

• Access – Ensure youth entrepreneurs can access finance, markets, and digital infrastructure.

• Adaptability – Build systems that allow rapid response to shocks, including flexible regulation and emergency support.

• Alignment – Integrate youth entrepreneurship into broader national strategies on climate, trade, and labour.

• Agency – Involve young entrepreneurs directly in policy design, recognizing them as stakeholders rather than beneficiaries.

The convergence of geopolitical, economic, environmental, and technological disruptions is redefining the future of enterprise. For youth, this future is uncertain—but not without promise. The next generation of entrepreneurs will not simply operate within existing systems; they will help reshape and redesign them.

The challenge for policymakers is clear: move beyond protection towards empowerment. In a world defined by volatility, resilience will depend not only on strong institutions, but also on the ingenuity, adaptability, and agency of young people themselves. Investing in youth entrepreneurship is therefore not simply a social policy choice; it is an economic and strategic imperative for resilient and inclusive growth.

About the Author

 Kelvin Sergeant is the Senior Sustainable Enterprise Development and Job Creation Specialist for East and South-East Asia and the Pacific at the ILO Decent Work Technical Support Team in Bangkok, Thailand. His work focuses on youth entrepreneurship, decent work, and sustainable enterprise development across the Asia-Pacific region.