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PURSUING SHARED PROSPERITY IN AN ERA OF TURBULENCE AND HIGH COMMODITY PRICES ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2012.

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Presentation on theme: "PURSUING SHARED PROSPERITY IN AN ERA OF TURBULENCE AND HIGH COMMODITY PRICES ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2012."— Presentation transcript:

1 PURSUING SHARED PROSPERITY IN AN ERA OF TURBULENCE AND HIGH COMMODITY PRICES ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2012

2 2 PURSUING SHARED PROSPERITY IN AN ERA OF TURBULENCE AND HIGH COMMODITY PRICES Key messages Asia-Pacific growth to slow in 2012 amidst global turbulence: Spillovers of the euro zone turmoil Global oil price hikes Excess liquidity and volatile capital flows Key long-term challenge: high & volatile commodity prices To steer inclusive development the Asia-Pacific region should: Undertake actions to stimulate & rebalance growth Promote regional cooperation to share risks & opportunities Play an active role in building development-friendly global economic environment & governance Implement long-term structural reforms to cope with high commodity prices

3 3 2012: Growth decelerates but Asia-Pacific is growth pole Growth is forecast to moderate to 6.5% in 2012 from 7% in 2011, with downward pressures from subdued developed economies The extent of slowdown varies across subregions Inflation likely to soften to 4.8% in 2012 from 6.1% in 2011 Despite the slowdown, the region remains an anchor of stability and growth pole for the world economy Developing Asia-Pacific accounts for a quarter of trade in Africa PURSUING SHARED PROSPERITY IN AN ERA OF TURBULENCE AND HIGH COMMODITY PRICES

4 4 GDP growth in selected economies PURSUING SHARED PROSPERITY IN AN ERA OF TURBULENCE AND HIGH COMMODITY PRICES

5 5 Inflation in selected economies PURSUING SHARED PROSPERITY IN AN ERA OF TURBULENCE AND HIGH COMMODITY PRICES

6 6 Key downside risks Euro zone crisis would cut growth by at least 1.3 percentage points and export value by $390 billion from the baseline 14 million fewer people could escape poverty by 2013 LDCs and LLDCs suffer the most Oil price surges could lift inflation by 1.3 percentage points with a greater impact on poorer groups. Fuel price subsidy bill can be $15 billion higher PURSUING SHARED PROSPERITY IN AN ERA OF TURBULENCE AND HIGH COMMODITY PRICES Loose monetary policies in developed economies heighten the risk of asset market bubbles, exchange rate appreciation and inflationary pressures The imposition of trade restrictive measures would impact exports On the upside, weak demand from advanced economies is cushioned by robust intraregional trade and investment

7 7 Policy challenge I Managing the growth and inflation balance Asia-Pacific generally has room for fiscal and monetary policy responses The concern with enactment of stimulus measures is their impact on inflation Policymakers need to find their preferred inflation-growth nexus PURSUING SHARED PROSPERITY IN AN ERA OF TURBULENCE AND HIGH COMMODITY PRICES

8 8 Policy challenge II Coping with capital flows Extreme capital inflows, mainly driven by debt investment Still striving to arrive at the appropriate financial market policies Overall stringency of measures help prevent extraordinarily high surges in inflows Capital account management measures must be designed to deal with of a “new normal” of short-term capital inflows PURSUING SHARED PROSPERITY IN AN ERA OF TURBULENCE AND HIGH COMMODITY PRICES

9 9 Policy challenge III Addressing jobless recovery Insufficient job creation in the formal sector in developing countries High youth unemployment: the young are over 3 times more likely to be unemployed Over 1 billion workers are in vulnerable employment Employment policies should improve productivity and working conditions and increase youth employment opportunities PURSUING SHARED PROSPERITY IN AN ERA OF TURBULENCE AND HIGH COMMODITY PRICES

10 10 Policy challenge IV Rising income and social inequalities Growth helped reducing poverty but income inequality on the rise Gini index rose worryingly from 32 to 38 in the past decades Social development has been significantly constrained by the levels of inequality Ensuring equal opportunities to those who have been left behind PURSUING SHARED PROSPERITY IN AN ERA OF TURBULENCE AND HIGH COMMODITY PRICES

11 11 Policy challenge V Dealing with disaster risks Damages and losses in Asia- Pacific are at least $267 billion in 2011 Large spillovers to other economies in regional production networks Need to invest more in disaster risk reduction Government to take a leading role in disaster prevention and management, and in better utilizing regional cooperation frameworks PURSUING SHARED PROSPERITY IN AN ERA OF TURBULENCE AND HIGH COMMODITY PRICES

12 12 Policy challenge VI Rebalancing towards better-quality growth The medium-term need for the region continues to be to redirect its growth drivers from extra-regional demand to intra-regional and domestic demand Policies should be designed to: Increase the inclusiveness of growth Broadening social protection and providing quality public service delivery Foster the development of the agricultural sector Sustainable, knowledge-intensive “green revolution” Support the “green economy” Public-private finance and low-cost access to technology Exploit the potential of regional economic integration A pan- Asia-Pacific integrated market and enhanced physical connectivity PURSUING SHARED PROSPERITY IN AN ERA OF TURBULENCE AND HIGH COMMODITY PRICES

13 13 Policy challenge VII Development-friendly global economic environment and governance The region has to make the international community aware of the need to undertake reforms to: Revive growth and employment Avoid excessive liquidity creation Moderate the volatility of oil and food prices Build a more development-friendly int’l financial architecture The United Nations should play a leading role in facilitating broad-based consultations on global issues, e.g. an outlet for non-G20 countries to communicate their views PURSUING SHARED PROSPERITY IN AN ERA OF TURBULENCE AND HIGH COMMODITY PRICES

14 14 Long-term challenge Living with high commodity prices Rising trend since 2000, punctuated by the global economic crisis Prices have increased from 1.8% to 17.4% per year The commodity boom can be seen in the context of the rise of emerging economies, including in Asia-Pacific PURSUING SHARED PROSPERITY IN AN ERA OF TURBULENCE AND HIGH COMMODITY PRICES

15 15 How price shifts have changed incentives towards increasing modernization Catching-up countries stay where they are Commodity-boom countries fall back Aspiring countries have fewer chances to move up PURSUING SHARED PROSPERITY IN AN ERA OF TURBULENCE AND HIGH COMMODITY PRICES

16 16 Policy options Adapting to an era of high commodity prices Catching-up countries: Diversify economic structure Create productive employment opportunities Increase domestic consumption Commodity-boom countries: Shield import-competing and non-resource export sectors from deindustrialization Use resource flows to smooth the ups and downs in revenue Enhance human capital to foster technical progress in resource sector Aspiring countries: Reduce reliance on few labour-intensive manufactures by participating in regional supply chains Strengthen social protection and boost agricultural productivity to cope with high food prices PURSUING SHARED PROSPERITY IN AN ERA OF TURBULENCE AND HIGH COMMODITY PRICES

17 17 Towards shared prosperity The region continues to face a challenging external economic climate Fortunately, most countries are in a favourable position to undertake a wide range of policy actions to stimulate and rebalance growth Enhanced regional cooperation will enable national policies to have greater influence both at the regional and international level An inclusive development path boosts new growth drivers by addressing the wide gaps in income and social progress PURSUING SHARED PROSPERITY IN AN ERA OF TURBULENCE AND HIGH COMMODITY PRICES

18 Thank you Economic and Social Survey of Asia and the Pacific 2012 is downloadable on:


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