May 19, 2015 (LBO) – Economic growth in Asia and the Pacific is expected to increase only slightly to 5.9 percent in 2015 from 5.8 percent in 2014, a recent report revealed.
“Economic growth in Asia Pacific continues to fare well in the global context,” the Economic and Social Survey of Asia and the Pacific 2015 issued by the UN Economic and Social Commission for Asia and the Pacific (ESCAP) said.
“This outlook is based on relatively improved economic performance in a number of major developing economies, including Bangladesh, India, Indonesia, Papua New Guinea, the Republic of Korea and Thailand,”
“Some of these economies are undertaking reform programmes under new administrations, which are expected to generate positive results in 2015,”
India is expected to grow by 8.2 percent, Bangladesh 6.5 percent, Papua New Guinea 15.0 percent and Indonesia by 5.8 percent in 2015.
Meanwhile, the outlook for some exporting economies remains less upbeat due to slow growth in the eurozone and Japan, as well as in China, the report says.
Despite only a moderate increase in economic growth in developing economies, excluding those in North and Central Asia, the region will continue to lead the global economic recovery, with growth in 2015 expected to be nearly two and a half times greater than in the major global developed economies.
“Nevertheless, it is also the case that the growth differential between the region and the developed world is becoming smaller compared with the pre-crisis period when growth in the region was more than three times faster,”
“The narrowing differential is due to a slowdown in the region and to the fact that the developed economies have returned to growth that is close to their pre-crisis levels,”
“Thus, unless comprehensive and concerted reforms are vigorously pursued, downside risks to the growth trajectory of developing economies of the region could increase.”
The report says since the region’s economic growth outlook is primarily influenced by domestic and intraregional factors, rather than external factors, countries have the opportunity to change the growth dynamics.
“The role of private consumption and investment in the region is expected to be much more pronounced in driving economic growth than exports, the prospects for which remain less upbeat,”
“Generally, the economic growth of the region’s developing economies is below potential and below pre-crisis level as a range of structural weaknesses remain, such as infrastructure shortages, the excessive commodity-dependence of some economies and low productivity,”
The fragile global economic recovery continues to be an additional drag for the region’s growth prospects.
Since demand continues to increase due to growing populations and incomes, it is critical to enhance the supply potential of developing economies by focused efforts on improving the availability and quality of infrastructure, the report says.
Urbanization throughout the region is generating additional demands for infrastructure.
Growing demand for infrastructure development calls for the report says, not only exploiting further the traditional sources of finance, such as tax receipts and overseas development assistance, but looking at tapping broader sources of financing, such as regional capital markets by ensuring development of local currency bond markets, and encouraging public-private partnerships to leverage financing and skills.
“A supportive legal and regulatory environment together with enhanced capacity to evaluate infrastructure projects can go a long way in achieving this objective,”
“The emergence of new development banks, such as the Asian Infrastructure Investment Bank, will also be able to contribute to the infrastructure development in the region.”