Developing countries in Asia and the Pacific are experiencing yet another year of subdued economic growth, marking the third successive year of growth below 6 per cent, according to the annual flagship publication of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
“Developing countries in the region are forecast to grow at an average of 5.8 per cent in 2014, up from 5.6 per cent last year,” according to theEconomic and Social Survey of Asia and the Pacific 2014.
“This marks the third successive year of growth below 6 per cent. By comparison, growth averaged 9.5 per cent in the pre-crisis years of 2005-2007 and over 7 per cent in 2010 and 2011.”
The Survey is the oldest and most comprehensive annual review of economic and social development in Asia and the Pacific, according to ESCAP.
This year’s report was launched today by Shamshad Akhtar, the Executive Secretary of ESCAP, in Bangkok, Thailand, where the Commission is holding its 70th annual policy session. The session, focused on the theme “Regional connectivity for shared prosperity”, opened Monday and closes on Friday, 8 August.
Among its other findings, the report notes the growing disparity in incomes and access to social opportunities is a dampener on economic dynamism in Asia-Pacific developing countries.
The estimates indicate that the poorest 20 per cent of people in 40 Asia-Pacific countries account for less than 10 per cent of national income. The net wealth of about 49,000 ultra-wealthy individuals in the region – with at least $30 million in assets – is 17 times the combined gross domestic product (GDP) of Asia-Pacific least developed countries.
Ms. Akhtar stressed the urgency for bridging gaps in infrastructure and development in the region and addressing environmental degradation in order to promote higher, well-balanced and sustainable growth. Another priority for ensuring the sustainability of growth is to better address climate change through improved climate finance.
“The constrained domestic growth prospects of the region have underlined the importance of productive counter-cyclical public spending to support inclusive growth and sustainable development,” Executive Secretary Akhtar said in a press release on the report.
She went on to say that developing economies in Asia and the Pacific are experiencing subdued growth for different reasons, including economic rebalancing and sustainability considerations in China, monetary tightening to fight capital flight and inflation in India and Indonesia, and the impact of geopolitical instability in the Russian Federation.
China, India, Indonesia and the Russian Federation are projected to grow at 7.5, 5.5, 5.4 and 0.3 per cent, respectively, in 2014, compared to 7.7, 4.7, 5.8 and 1.3 per cent, respectively, in 2013.
The group of 12 least developed countries in the region are forecast to grow at 5.6 per cent in 2014 – slower than the developing Asia-Pacific average.
Asia-Pacific countries are also coping with the fallout from monetary and trade policies in the developed world, according to ESCAP. The withdrawal of quantitative easing by the United States has jolted regional financial markets.
The 2014 survey estimates further financial market volatility, expected from the continued normalization of monetary policy in the US could cut annual growth by between 0.7 to 0.9 per cent in India, Indonesia, Malaysia, the Russian Federation, Thailand and Turkey.
Trade-restrictive measures in advanced economies outside the region may also have deprived Asia-Pacific developing countries of $255 billion in goods export opportunities between 2009 and 2013, translating into a cumulative decline of more than 1.6 per cent of regional economic output, the ESCAP analysis reveals.
ESCAP proposes the establishment of an Asia-Pacific Tax Forum of experts and officials which it would coordinate, to monitor tax legislation and regulations across the region, help develop regional best-practice, and address issues ranging from avoiding tax competition for foreign investment, to double taxation, and preventing the illicit transfer of funds.
“The 2014 Survey makes a valuable contribution to the development discourse underway in the Asia-Pacific region and beyond. It provides fresh data, new perspectives and policy guidance on issues which are critical to fostering more inclusive and sustainable development,” the ESCAP Executive Secretary said.