Full Report - Subregional Office for East and North-East Asia - escap

ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2013
As a result of reduced demand in the developed
world, the Asia-Pacific region experienced a broadbased
slowdown in 2012. The persistent climate
of economic policy uncertainty in the euro zone
and the United States is estimated by ESCAP
to have reduced GDP in the Asia-Pacific region
by 3% below what it would have been otherwise,
with a total loss in GDP of $870 billion. A number
of large economies in Asia and the Pacific, most
notably those of China and India, which proved
resilient in the early part of the Great Recession
of 2008-2009, subsequently have slowed markedly,
reducing the support they had previously provided
to Asia-Pacific economies through the channel of
intraregional demand.
ESCAP analysis indicates that lower growth
compared to recent years could become a “new
normal” for many regional economies if present
economic trends were to continue. The output loss
could be significant for the region as a whole at
almost $1.3 trillion from the start of the crisis until
2017. Policies to create or strengthen alternative
sources of growth should be viewed as a priority
in order to prevent the onset of the “new normal”
of lower growth.
The impact of the generalized
slowdown on inclusive and
sustainable development in the region
stands to be substantial
The impact of the generalized slowdown since
2011 on inclusive and sustainable development in
the region stands to be substantial with job and
income growth expected to decline. Job growth is
already seen to be on the wane, with 10 out of
13 countries in a recent regional sample exhibiting
a year-on-year decrease in job growth compared
to 2011. Of critical concern is the impact the
slowdown in income growth will have on poverty
and inequality. ESCAP analysis indicates that the
population-weighted mean Gini coefficient for the
entire region has already increased from 29.9% in
the 1990s to 36.8% in the latest available year.
Furthermore, inequality has a critical impact on the
achievement of social goals. The social development
index developed by ESCAP shows an average
potential loss of over 20% due to inequality.
The slowdown in 2012 of the two powerhouses of
the region, China and India, has been the key new
concern for the smaller economies of Asia and the
Pacific. The slower growth in the major regional
economies has reduced demand for imports from
the smaller exporting economies in the region.
However, a more positive development in the mediumterm
is likely to arise from the ongoing effort to
rebalance the Chinese economy towards being more
consumption-led, in line with the government’s efforts
to reduce hardcore poverty, income inequality and
regional disparities. This rebalancing may produce a
net positive impact on other countries in the region
by creating new sources of demand in the Chinese
economy. ESCAP analysis indicates that the total
benefit in exports for the region would be nearly
$13 billion during the period 2013-2015.
Economies in the region confronted by the challenges
of slowing demand in the developed world will have
to consider implementing supportive measures at
the domestic and regional levels to maintain their
development progress. In addition, governments
will have to take action to ensure specifically that
the jobs and incomes of the poorest and most
vulnerable sections of society are protected during
this difficult period.
The generalized slowdown across the region has
been compounded by long-term structural issues,
such as rising inequality and energy and infrastructure
shortages, which can be partly attributed to past
policy neglects and inadequate policy responses. In
other words, the underlying causes of the difficulties
being faced go beyond the impacts emanating
from the developed world. The slowdown, which is
affecting even economies of the region that have
large domestic markets, highlights the shortcomings
in the development strategies pursued over the past
few decades.
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