Economic and Social Survey of Asia and the Pacific 2018
Total Page：16
File Type：pdf, Size：1020Kb
ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2018 Mobilizing finance for sustained, inclusive and sustainable economic growth ii ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2018 ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2018 Mobilizing finance for sustained, inclusive and sustainable economic growth Shamshad Akhtar Executive Secretary Hongjoo Hahm Deputy Executive Secretary Hamza Ali Malik Director, Macroeconomic Policy and Financing for Development Division United Nations publication Sales No. E.18.II.F.16 Copyright © United Nations 2018 All rights reserved Printed in Bangkok ISBN: 978-92-1-120780-4 e-ISBN: 978-92-1-363324-3 ISSN: 0252-5704 ST/ESCAP/2829 This publication may be reproduced in whole or in part for educational or non-profit purposes without special permission from the copyright holder, provided that the source is acknowledged. The ESCAP Publications Office would appreciate receiving a copy of any publication that uses this publication as a source. No use may be made of this publication for resale or any other commercial purpose whatsoever without prior permission. Applications for such permission, with a statement of the purpose and extent of reproduction, should be addressed to the Secretary of the Publications Board, United Nations, New York. FOREWORD iii FOREWORD The Asia-Pacific region continues to show Financing will be critical, yet the Asia and Pacific strong economic performance. Improved global region faces sizeable investment gaps. This economic conditions provided further impetus edition of the Economic and Social Survey of to the dynamism of the region as it delivered Asia and the Pacific analyses policy options for stronger-than-expected growth in 2017. The strengthening tax revenues, enhancing prudent steady progress provides room for policymakers sovereign borrowing and leveraging private capital. to look beyond the expansion of output, and to The Survey underscores the importance of effective improve social inclusiveness and environmental institutional arrangements, strong administrative sustainability. Clearly, the Asia-Pacific region has and governance capabilities, and market-friendly great potential to help the world implement the rules and regulations. It also explores ways to 2030 Agenda for Sustainable Development and finance small and medium-sized enterprises and build a fair globalization and an inclusive future. to harness the potential of financial technology. At the same time, the region faces elevated The countries in the Asia-Pacific region are diverse levels of global policy uncertainty, growing trade and home to some of the most vibrant economies protectionism and a likely tightening of financial of the world. Their policies and experiences hold conditions. This situation may delay a more valuable lessons for regional peers and beyond. I broad-based rebound in trade and investment. commend this timely analysis and policy advice Efforts to lift productivity and create decent to a wide audience. jobs also remain challenging against a backdrop of demographic transitions and technological advancement. Policymakers will need to maintain a focus on reducing poverty, mitigating inequalities and minimizing the environmental costs of rapid economic growth. António Guterres Secretary-General of the United Nations iv ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2018 PREFACE Recent economic trends in Asia and the Pacific regional economies as consumption grew in lend optimism to perceptions that the region will major economies in line with growing purchasing maintain its preponderant influence as the engine power and recovery of remittances flows and of the global economy. Economic growth in 2017 revival of oil-producing countries as oil prices went was shared by a broad base of countries, with up. Beyond cyclical recovery, investment demand growth accelerating in two thirds of the regional revived as the business climate improved and economies, accounting for more than 80 per cent countries expedited infrastructure development. of the region’s GDP. The region’s long trend of Investment prospects seem positive, as new robust economic growth, estimated at 5.8 per investments take place in technology, climate- cent in 2017 compared with 5.4 per cent in friendly and energy-efficient projects, such as 2016, is anticipated to remain steady, reflecting renewables. Countries are also addressing long- growing dynamism amid relatively favourable standing challenges of the business and policy global economic conditions that are underpinned environment and macroeconomic and financial by a revival of demand and steady inflation. stability – an emerging concern, as borrowing Robust domestic demand, recovering investment costs and debt sustainability considerations will and trade volumes all contributed to the 2017 magnify as interest rate pressures grow. growth trajectory and underpin a stable outlook for 2018. The current situation has emerged Prospects for least developed countries remain due to a combination of factors. a concern, despite their average growth being in the range of 7 per cent, because they have First, the global recovery has been broad based inherent vulnerabilities to terms-of-trade shocks and is expected to be sustained as advanced and exposure to natural disasters. economies, namely Japan, the United States of America and those in the European Union, bounced Macroeconomic dynamics demand continued back supported by upturns in manufacturing, vigilance and management. Weaknesses in public investment and trade. Global economic prospects finance remain, as developing countries’ resource look stable and will benefit from new measures, mobilization remains low despite structural such as a reduction in the statutory corporate tax reforms designed to enhance the tax net and rate of the United States, but the global scenario achieve better compliance. Monetary management is burdened by old and new uncertainties. will remain complicated, as advanced countries reverse their unprecedented monetary easing Second, in addition to the revival in external and low interest rates. Inflation is picking up, demand, domestic demand has picked up in as aggregate demand is gaining momentum PREFACE v and international oil prices have risen. If these Specific challenges include maintaining steady complications are contained, inflation should long-term economic growth to tap the region’s remain moderate, although possibly they will be potential through enhancements in productivity, a concern for oil-importing countries and those the slow pace of skills advancements for the vulnerable to movement in exchange rates. creation of decent jobs, and rising inequality and environmental degradation. These challenges There are risks on the horizon: growing financial are compounded by the uncertain impact of vulnerability and rising private and corporate debt, the “Fourth Industrial Revolution”, which involves particularly in China and countries in South-East deep structural transformation of economies as Asia, falling or low reserves in a few South Asian it is likely to be accompanied by disruptions and economies and uncertainty concerning trends in dislocation to both industry and jobs even as it commodity prices. Our policy simulation for 18 provides new opportunities. countries suggests that a $10 rise in the price of oil per barrel would dampen GDP growth by This context calls for taking the necessary policy 0.14 - 0.4 percentage points, widen external current measures, a step which requires improved policy account deficits by 0.5 -1.0 percentage points management and execution, strong political and build inflationary pressures in oil-importing will and broad-based leveraging of financing economies. Oil exporters, however, would see a for development. There is significant scope positive impact. for improved public expenditure efficiency and mobilizing additional public and private resources. Furthermore, while trade rebounded in 2017, Many countries in the region have some of the trade protectionism has seen a revival in recent lowest rates of domestic resource mobilization, years and continues to be a threat to global and large private sector resources are not being economic stabilization. Uncertainty and more invested in support of sustainable development. trade protectionism may negatively affect some of the region’s traditional strengths, such as open Financing for development is not “just about export-oriented markets. the money”. For example, it also involves State institution building, answering fundamental In the medium term, taking advantage of the questions, such as distilling the core functions steady pace of economic expansion, policymakers of the State in an economy and developing must work to implement the 2030 Agenda for financial markets to service the people and the Sustainable Development to ensure that the quality planet. To shed light on these issues, the Survey of economic growth is inclusive and sustainable. for 2018 contains an exploration of specific vi ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2018 questions. How could Governments in the Asia- Similarly, the role that government effectiveness Pacific region expand and make effective use of and macroeconomic fundamentals can play in fiscal space? How could Governments enhance increasing the fiscal space through public bonds resource mobilization? How could financial is notable. inclusion be scaled up? How could countries fix excess resource use? How could private capital The Asia-Pacific region is