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ECONOMIC AND SOCIAL SURVEY
OF ASIA AND THE PACIFIC 2015
Under-Secretary-General of the United Nations
and Executive Secretary of ESCAP
• Policy focus on economic growth is necessary, but it is not sufficient
for achieving development.
– Policymakers need to internalize the aspects of inclusive growth and sustainable
development into their domestic policy frameworks.
• Economic growth in Asia-Pacific developing economies will
experience only a slight increase in 2015.
– Unless reforms are vigorously pursued, downside risks to the growth trajectory
• Inflation has declined and is expected to remain low, leading to
interest rate reductions.
– Prudence, however, is required given the likely volatility in capital flows,
especially in economies with weak fundamentals.
• Economic growth has not been inclusive within countries.
– Inequality of income and of opportunity has risen between different geographies
and sections of society such as rural and urban areas and women and men.
A moderate economic growth outlook
• Economic growth in developing
Asia and the Pacific is forecast
to rise only slightly to 5.9% in
2015 from 5.8% in 2014.
– this outlook is primarily associated
with domestic and intra-regional
• Economic growth potential in the
region is being held back by,
among others, two key
– infrastructure shortages
– commodity dependence
• Fragile global economic
recovery also exerting drag on
growth prospects of the region.
6.0 5.8 5.9 5.9
2.8 3.1 2.8
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Developing Asia-Pacific economies (a)
Major global developed economies (b)
Relatively better growth outlooks for all
subregions except North and Central Asia
-4 -2 0 2 4 6 8 10
South and South-West Asia
Pacific island developing economies
North and Central Asia
East and North-East Asia
2014 2015 2016
Real annual GDP growth (%)
Importance of addressing
• Weaknesses in infrastructure is one of the key factors holding back
the region’s economic growth potential.
• Significant investment in infrastructure is required, not least to meet
the increasing demand due to growing incomes and populations
together with the requirements of rapid urbanization.
• Efforts are needed on multiple fronts, including increasing
government revenues, developing capital markets, and nurturing
– Emergence of Asian Infrastructure Investment Bank is an important development
to meet the infrastructure deficit gap of the region.
• Need to remember that raising necessary finance is not the only
solution; capacity to assess feasibility of bankable projects and an
enabling legal and regulatory environment is also important.
Reducing negative implications of
• Excessive commodity dependence can influence a host of
economic indicators such as inflation, exchange rates, and budget
and current account deficits
• To mitigate the negative implications, countries could consider:
– targeting a cyclically-adjusted fiscal balance that takes into account
the potential revenue shocks due to large movements in commodity
– Developing a production-oriented index to control inflation as it is more
appropriate for countries susceptible to terms-of-trade shocks.
Countries where commodity export-to-GDP ratio exceeded 10% in 2000-2013
30% plus Azerbaijan (‐4.3), Brunei Darussalam (4.4), Islamic Republic of Iran (2.8),
Kazakhstan (‐4.5), Mongolia (‐5.7), Myanmar (0.2), Papua New Guinea (10.4),
Timor‐Leste (1.4) and Turkmenistan (‐1.2)
10‐30% Australia (0.3), Bhutan (2.6), Indonesia (‐0.2), Malaysia (0.3), the Russian
Federation (‐4.3) and Viet Nam (0.7)
Note: Figures in parentheses show the percentage point difference between real GDP growth in 2013 and the 2015
Outlook for trade, and thus an external
demand led growth, remains challenging
• Exports of the region have been declining for few years now; outlook
is not much different, primarily due to fragile economic recovery in
most advanced economies.
• Similarly, sluggish import demand of major economies in the region
will impact intraregional trade, and thus the overall trade outlook.
• Inflation forecast to decline in 2015 to 3.3% in 2015 from 3.9% in
2014, driven by lower international oil prices and reduced demand
pressure in export-led economies.
• For net oil importing economies, the decline in oil prices is and will
remain beneficial. But this is not the case for oil exporting economies,
due to pressure on their currencies and thus imported inflation.
Monetary policy – balance benign inflation
outlook and likely capital flow volatility
• Declining inflation has provided space for an accommodative monetary
policy stance in many economies of the region.
• At the same time, likely increase in interest rates in United States is
encouraging capital outflows from region; countries with weaker
macroeconomic fundamentals are likely to be most affected.
• This may necessitate higher interest rate by developing economies of
the region. Partly because of this, some economies are already
keeping real interest rates at a relatively higher level.
• ESCAP analysis shows that countries with better fundamentals will
have to increase interest rates, if and when such a need arises, less to
defend against capital outflows – positive impact on GDP growth of up
to 0.5 percentage points
• Macroprudential policies offer an important complementary method of
managing capital flows while allowing governments to preserve
monetary policy flexibility and maintaining domestic financial stability.
Realizing inclusive growth
• Inclusiveness is typically measured using income-related
• Yet, inclusiveness is a multidimensional concept that goes beyond
economic measures. It should also capture social and environment
dimensions of development.
• Inclusiveness is broadly defined in terms of:
(a) increasing the average standard of living of the population;
(b) reducing income inequality;
(c) reducing levels of extreme poverty and
(d) expanding and broadening equality in opportunities (social
and environment related)
“We, the Heads of State and Government and high-level
representatives, renew our commitment … to ensuring the
promotion of an economically, socially and environmentally
sustainable future… for present and future generations. “
• Rates of extreme poverty have declined.
• Yet, significant differences remain between rural/urban sectors and
7.8 8.0 6.5
China India Indonesia
• Income inequality has increased.
• Lack of productive employment is one of the major reasons for the
high incidence of poverty in many developing countries.
0 20 40 60 80 100
Republic of Korea
Vulnerable employment Unemployment
0 10 20 30 40 50 60
Opportunity index for children
Primary school age groud Secondary school age group
Secondary school attendance
Males Urban Males Rural Females Urban Females Rural
• Enrolment rates diverge across sector and gender and across income
Access, affordability and
acceptability of health services
are critical in identifying whether
growth is inclusive.
• Large spatial differences
characterize provision of
• High ‘out-of-pocket payments’
affect particularly low-income
• Services may note be socially
or culturally appropriate,
particularly when related to
sexual and reproductive health
Poorest 20% Q2 Q3 Q4 Richest 20%Percentage
Percentage of skilled birth attendance in
three years preceding survey, by income
Bangladesh Cambodia India
Indonesia Nepal Pakistan
Philippines Timor-Leste Turkey
• Being less resilient, the poor
are particularly affected by
• Environmental degradation
can also be an outcome of
• Important progress in
increasing access to improved
water, yet disparities still exist
between rural and urban
• Achievements in access to
improved sanitation have been
Pacific South and
Access to improved sanitation
• At least 620 million people lack
access to electricity in the
• Large disparities between rural
and urban sectors.
• More than 1 million premature
deaths annually in India and
China can be attributed to
exposure to household air
0% 20% 40% 60% 80% 100%
Access to electricity, 2012
Rural electrification rate (%) Urban electrification rate (%)
ESCAP Inclusiveness Index
The ESCAP Inclusiveness Index
captures 15 indicators, covering
economic, social and
environmental dimensions of
Overall, growth has been
Yet, some countries have made
more progress than others.
Growth has not been inclusive
Intergenerational inequities can
be perpetuated if large and
widening income inequalities are
1. Address the neglect of the rural sector.
• Increase agricultural productivity by focusing on quality and
standards, investments in R&D.
• Develop non-farm sector through rural industrialization.
2. Strengthen financial development, foster financial inclusion.
3. Foster creation of small and medium-sized enterprises.
4. Strengthen the developmental role of macroeconomic policy by
making existing expenditure more development-oriented:
• Reduce non-development expenditure (defence, energy
• Increase access to and the affordability of health systems.
• Strengthen social protection programmes.
• Expand investment in education.