PR94262

LONDON, Jan. 27, 2022, /PRNewswire=KYODO JBN/ --

Asia is facing a triple policy challenge that could see even the region's

fastest-growing economies fall into the 'middle-income trap', according to new

research by Asia House.

The report highlights Asia's position at a crossroads, with countries'

trajectories towards becoming advanced economies at risk of being derailed by

economic scarring from the COVID-19 crisis, the disruptive impact of climate

change, and a slow pace of digitalisation.

Without urgent and robust policy action to address these challenges, Asia's

economies face being caught in a middle-income trap that hampers development

and puts the region's long-term growth at risk, the report finds.  

'A shift is needed towards policies that specifically address both the

immediate economic scarring of the pandemic and secure longer-term resilience

and prosperity,' the report recommends.

'For the 21st century to become the Asian Century, with Asia's economies set to

take a share of over half of global GDP by 2050, only a determined effort by

the authorities to fill an evident policy gap will enable growth to continue at

the required levels. Adopting a trio of priorities now will enable a robust

economic tomorrow: green finance, digitalisation and enhanced regional

cooperation.'

The London-based think tank assessed eight key economies in Asia across metrics

conducive to meeting these challenges. In two new indices published today, Asia

House analyses the performance of China, India, Indonesia, Japan, Malaysia, the

Philippines, Thailand, and Vietnam in the critical areas of green finance and

digitalisation readiness – areas that will unlock future productivity and

enable sustainable growth.

China leads the Asia House Economic Readiness Indices, but will see economic

growth slow in 2022 due to the ongoing disruption of COVID-19. While India is

expected to be the world's fastest-growing economy this year, its ranks lowest

for digital readiness out of the eight economies assessed. Closing its digital

divide will be essential for its long-term growth.

Japan ranks second across both indices, and is likely to experience a moderate

acceleration in growth in 2022, but authorities must speed up digitalisation

efforts, the report finds. Within Southeast Asia, Malaysia and Indonesia lead

in green finance readiness and digital transformation respectively.

View the Asia House Economic Readiness Indices in the Executive Summary here [

https://asiahouse.org/wp-content/uploads/2022/01/Asia-House-Report-Exec-Summary.pdf

]. The indices form part of the inaugural Asia House Annual Outlook, published

by the think tank to track key economic trends across Asia and provide a

forecast for the region's growth.

Comment

Phyllis Papadavid, Head of Research and Advisory, Asia House:

"Our research underlines the critical importance of green finance, broader

digitalisation, and greater regional coordination for Asian economies if they

are to avoid being caught in a middle-income trap that holds them back from

greater development.

"If Asian economies can respond effectively to this triple policy challenge,

then sustainable, equitable and productivity-driven growth will likely follow,

along with brighter prospects for the 'Asian Century'.

"For this to happen, we need to see unprecedented investment for energy

transitions, including fast-tracking green finance, and more diversified

digitalisation in Asia. More comprehensive policy cooperation by regional

economies will be critical to achieve these shared objectives."

Michael Lawrence, Chief Executive of Asia House:

"The Asia House Economic Readiness Indices shed new light on the progress of

Asia's economies at a critical time in their development. Alongside the Asia

House Annual Outlook report, we hope they will serve as valuable insights into

the region's transition, and will aid policymakers in identifying areas where

action is needed.

"Asia is estimated to account for half of global GDP by 2050, but as our

research shows, this is not guaranteed. Asia House will be publishing the

indices annually to track this trend and add to global understanding of this

key region for the world economy."

Policy recommendations

Drawing on the indices, the Asia House Annual Outlook report includes several

recommendations for policymakers across Asia.

    -- Economic policymakers should elevate the use of institutionally

       mobilised finance, including blended finance, to de-risk and catalyse

       investment flows.

    -- Private and public sector coordination to promote and incentivise green

       finance should be prioritised to combat the climate crisis.

    -- Asia's central banks should include sustainability objectives into their

       monetary policy mandates and explicitly incorporate climate risks into

       their assessments.

    -- The promotion of Industry 4.0 – the integration of automation,

       artificial intelligence, cloud computing etc in manufacturing - coupled

       with digital re-skilling and knowledge diffusion is needed to secure the

       Asian Century and avoid the middle-income trap.

    -- Currency reserves should be pooled and their management coordinated,

       while the foundation for a common digital currency in Asia will ensure

       the region is well prepared to sustain growth.

Access the full Asia House Annual Outlook report here [

https://asiahouse.org/wp-content/uploads/2022/01/Asia-House-Annual-Outlook-2022.pdf

]

SOURCE: Asia House