ADB warns complacency threatens to derail 'Asian century'

TOKYO : Asia could be as wealthy as Europe by mid-century, but only if it tackles key challenges from inequality and corruption to climate change, says the Asian Development Bank.

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  Kuroda: Resource management the key
  Based on current trends, Asia will make up half the world's economic output by 2050, and another 3 billion people will have joined the ranks of the affluent, their incomes matching those of Europe today.
  But the ADB study also notes the world's fastest-growing region remains home to almost half the world's absolute poor, who earn less than US$1.25 a day.
  Asia's decades-long march to prosperity, the ADB study said, was being led by seven economies with more than 3 billion people among them - China, India, Indonesia, Japan, South Korea, Thailand and Malaysia.
  Under the best-case scenario, Asia's combined GDP - also including poorer nations such as Laos and Pakistan - will rise from $17 trillion last year to $174 trillion in 2050, with per capita GDP of $40,800 in current terms.
  But for Asia's rise to be sustainable, the study warns, the diverse region must emulate the past successes of top performers Japan, South Korea and Singapore by promoting inclusive and equitable growth.
  "Asia is in the midst of a historic transformation," said the report, Asia 2050: Realising the Asian Century, commissioned by the Manila-based ADB and launched by president Haruhiko Kuroda in Tokyo.
  Mr Kuroda pointed out that developing Asia had led the way out of the global financial crisis and recession with a V-shaped recovery.
  "By nearly doubling its share of global gross domestic product to 52% by 2050, Asia would regain the dominant economic position it held some 300 years ago, before the industrial revolution," the report said.
  However, the study warned that Asia's rise is by no means inevitable.
  "Many see the ascendancy of Asia - or 'the Asian Century' - as being on autopilot, with the region gliding smoothly to its rightful place in destiny," wrote Mr Kuroda in a foreword to the report.
  "But complacency would be a mistake. While an Asian century is certainly plausible, it is not preordained."
  The report warned that emerging economies face the risk of being stuck in the "middle-income trap" as bursts of rapid growth, driven by export-based manufacturing, are followed by periods of stagnation or decline.
  It highlights other key challenges - rising inequality within and between countries, poor governance and corruption in many of them, and intensifying regional competition for finite natural resources.
  In the worst case, it warned, Asia could face "a perfect storm" of bad macroeconomic policies, unchecked financial sector exuberance, conflict, climate change, natural disasters, changing demography and weak governance.
  To make Asian growth sustainable, the study said, its countries must address poverty, equality of access and opportunity, and focus on education, entrepreneurship, innovation and technological development.
  Climate change is "a wild card for Asian development", warned the study, which stressed that Asia was already hit by more storms, floods and other natural disasters than any other region.
  Global warming threatens to melt the glaciers that run from the Himalayas and other mountain ranges to feed Asia's major rivers, which provide water, food, fish and power for 2.8 billion people, it said.
  "The anticipated affluence of some 3 billion additional Asians will put tremendous pressure on the earth's finite natural resources. "Out of self-interest, [Asia] will need to take the lead in radical energy efficiency and diversification programmes by switching from fossil fuels to renewable energy," said Mr Kuroda.
  "How we handle vital resources such as water and food will determine whether we stay on the path of economic growth and development, or stumble into conflicts of scarcity." AFP