Kuala Lumpur, 20/11/2015 – While the outlook for many OECD countries remains worryingly subdued, Emerging Asia (Southeast Asia, China and India) is set for robust – though more moderate than in recent years - growth over the medium term, according to the latest OECD Development Centre’s Economic Outlook for Southeast Asia, China and India. The report was produced in cooperation with the United Nations Economic and Social Commission for Asia and the Pacific and the Asian Development Bank Institute.
Real growth in Emerging Asia is projected to average 6.5% for 2015 and 6.2% annually over 2016-20. Growth will continue to slow in China while remaining strong in India at one of the highest levels in the region. Growth in the Association of Southeast Asian Nations (ASEAN) region is projected to average 4.6% in 2015 and 5.2% over 2016-20, led by growth in the Philippines and Viet Nam among the ASEAN-5 and in the CLM (Cambodia, Lao PDR and Myanmar) countries. Private consumption will be a large contributor to overall growth.
To sustain this robust momentum, the region will need to weather China’s slowing growth, which will continue to affect the rest of the region’s growth prospects, the impacts of the monetary normalisation in the United States and slowing productivity growth, says the Outlook.
Enhancing regional ties can play a key role in maintaining the growth momentum, the report says, in a special chapter on the topic.
“The region remains exposed to domestic and external risks. To maintain the growth momentum, strengthening regional ties is imperative. Enhanced monitoring capacities through better indicators and peer learning can make the regional agenda more effective and help move towards a global ASEAN integration,” said OECD Deputy Secretary-General Rintaro Tamaki, launching the Outlook at the ASEAN Business and Investment Summit in Malaysia.
The scale and scope of coordination need to be maximised among nations, among regions and sub-regions. Equally important is integrating these ties at the global ASEAN level, which involves deepening cooperation with neighbouring economies. According to the Outlook, a strong network of relations at various levels is essential for sustainable growth, including by taking active steps to realise a single economic market.
Reducing the disparities that hinder sustainable and inclusive growth is critical: poverty persistence and the uneven state of infrastructure throughout the region impacts development. Countries in need of priority action include Cambodia, Lao PDR and Myanmar.
“Green growth as well as the private sector as drivers of growth stand to benefit tremendously from the integration agenda,” said OECD Development Centre Director Mario Pezzini.
Removing tariffs and non-economic barriers can promote integration and facilitate trade in demanded renewable energy. Hydropower from the Mekong River, for example, remains a promising source of future generating capacity to be exported throughout the region. Similarly, with stronger economic integration, local businesses will have tangible opportunities to expand their operations beyond national borders and transform into regional players or ASEAN enterprises, says the Outlook.
Formulating new development strategies for the region will require adopting a comprehensive package of reforms for small- and medium-enterprises, finance, infrastructure, labour market and environmental policy as well as in the agriculture, education, social security and tourism sectors, according to the Outlook’s country-specific structural policy notes.
The Outlook contributes to the OECD Southeast Asia Regional Programme, launched at the OECD Ministerial Council Meeting in 2014. The programme aims to foster the exchange of good practices and mutual learning among policy makers in OECD and ASEAN countries.
FOR FURTHER INFORMATION
For more information on the Economic Outlook for Southeast Asia, China and India 2016, with country-specific policy focuses visit: http://www.oecd.org/dev/asia-pacific/.