Developing economies in the Asia-Pacific regioncontinue to fare well in comparison to the rest of the world, butstructural weaknesses constrain growth prospects, the United NationsEconomic and Social Commission for Asia and the Pacific (ESCAP) said in itslatest regional macroeconomic outlook report released today, emphasizingthat more inclusive economic growth is key to ensuring sustainableprosperity for all.
Growth in the region’s developing nations will increase only slightly, to5.9 per cent in 2015 from 5.8 per cent last year, with no significantchange expected in 2016, according to the Economic and Social Survey ofAsia and the Pacific 2015, ESCAP’s annual flagship publication. Inflationis also forecast to further decline and remain low, largely due to lowerinternational oil prices, which have led to interest rate cuts in manyeconomies of the region.
The growth potential of Asia-Pacific developing economies is being heldback by infrastructure shortages and the excessive commodity dependence ofsome countries. The fragile global economic recovery, and consequentlysubdued global trade, pose additional challenges.
Launching the Survey in Bangkok, United Nations Under-Secretary-General andESCAP Executive Secretary Dr. Shamshad Akhtar emphasized the need topromote quality growth and shared prosperity in the region, calling onregional policymakers to integrate and mainstream inclusive growth byadopting a mixed set of measures to achieve better social and environmentaloutcomes, to enhance public welfare.
To provide guidance to Asia-Pacific economies, ESCAP has also introduced anew multidimensional Index of Inclusiveness. Applying a core set of 15indicators of the economic, social and environmental dimensions ofdevelopment, the Index assigns equal weighting to each variable, to morecomprehensively assess the degree of inclusive outcomes. The Index alsoallows comparative scoring of the multidimensional aspects of inclusivenessacross different time periods.
“Adopting ESCAP’s new multidimensional Index will assist policymakers tobetter review and monitor progress on inclusive growth,” Dr. Akhtarexplained. The sample of 16 regional economies assessed in terms of theIndex showed overall progress at the national level, but that significantsocioeconomic disparities within countries remain, for example acrossgender, rural and urban divides, and geographical regions.
Inclusiveness demands continued stability and sustainable growth. In thiscontext, the recent uneven trend and pattern of economic growth requiresproactive economic policy stances and close vigilance.
Other findings of the Survey reveal mixed progress, with significantreductions in extreme poverty, accompanied by rising income inequality,particularly in urban areas of major developing countries, as well as slowgrowth in the availability of productive and decent employment. Developingeconomies in Asia and the Pacific also need to make better progress inensuring equality of opportunity for all, especially women and girls, bybroadening access to quality education and adequate health care.
The Survey projects that China’s planned moderation will lower its growthto 7 per cent in 2015, from 7.4 per cent last year, which is expected to bepartially offset by an acceleration of growth in India to 8.1 per cent,from 7.4 per cent last year. Indonesia is also forecast to see growth pickup to 5.6 per cent, from 5 per cent last year. However, in the latter twocountries, this outlook depends critically on solid and sustained domesticreforms.
Additionally, ESCAP highlights critical policy issues for subregions,including excessive dependence on natural resources and worker remittancesfor economic growth in North and Central Asia; as well as employment andclimate-related challenges in Pacific island developing countries.Macroeconomic imbalances and severe power shortages are key concerns inSouth and South-West Asia, along with weaknesses in infrastructure andskilled labour shortages in South-East Asia. The recent earthquake in Nepalis a fresh reminder of how natural disasters can reverse economic andsocial gains, with massive loss of life and livelihoods.
The region will remain susceptible to a range of risks and uncertainties –among others, possible fresh bouts of financial market volatility, delaysin addressing structural impediments, and political disruptions. In thiscontext, ESCAP urges stronger macroeconomic management, coupled withtargeted macro-prudential policies to cope with volatility in capital flowsexpected from current and emerging monetary policy conditions in theadvanced economies. The ESCAP analysis also argues in favour of caution asfar as the monetary policy stance of developing economies of the region isconcerned. One reason for this advice is the increase in volatility of oilprices on a rising trend since mid-March, with ESCAP predicting that$60-$70 per barrel is the likely floor to the oil price during 2015.
ESCAP also advocates promoting equality of opportunity and boosting decentjob creation through the development of small and medium sized enterprisesand rural industrialization, with the private sector taking on a criticalrole in making growth more inclusive. “Without a vibrant and strong privatesector, tackling poverty and rising levels of inequality and creating jobswill not be possible,” notes the Survey.
Public expenditures should be more development-oriented, particularlyenhancing access to quality education and healthcare, as well asstrengthening social safety nets to help break the vicious cycle ofdeprivation, which further intensifies poverty.
“To enhance well-being, countries need to go beyond just focusing on‘inequality of income’ and instead promote ‘equality of opportunities’,”Dr. Akhtar explained.
The Executive Secretary also urged Asia-Pacific Governments to focus ondomestic resource mobilization, making a series of recommendations forGovernments to not only increase their own revenues but importantly to alsobetter tap private sector resources for sustainable development – inparticular for climate-friendly infrastructure and social financing.
“While traditional sources of finance such as tax revenues and officialdevelopment assistance are important, in order to bridge the wide financinggap, efforts to deepen the region’s capital markets and engage the privatesector must be intensified,” said Dr. Akhtar.
Please find a report at:
http://www.unescap.org/resources/economic-and-social-survey-asia-and-pacific-2015