Growth in Asia Pacific Region will be subdued in 2013

01 May 2013

United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) flagship report tells that growth will slow down in Asia Pacific region in 2013 due to  developed world policy uncertainty and it calls for a paradigm shift in macroeconomic policies to make growth inclusive and sustainable.

New Horizons, May 2013 - The global launch of the ESCAP report called “Economic and Social Survey of Asia and the Pacific” took place all around the world, including Ankara on 18 April with the participation of UN Resident Coordinator a.i. Mustapha Sinaceur, Alberto Isgut, ESCAP expert and Associate Prof. Selin Sayek Böke of Bilkent University.
The title of this year’s report was “Forward-looking macroeconomic policies for inclusive and sustainable development”.

Inclusive and environment-friendly growth is the key

Asia-Pacific economies will see subdued growth in 2013 after last year’s sharp slowdown caused by external factors, the United Nations said in the report.

It is also added that efforts to stimulate demand must go hand in hand with macroeconomic course correction to promote broad-based and sustainable development.

Noting that the region’s economic progress has been marked by widening income inequalities and severe natural resources depletion, the Economic and Social Survey of Asia and the Pacific 2013 argues that macroeconomic policies can play a vital role in reorienting the region towards a more inclusive and sustainable growth path – a high priority of its post-2015 development agenda.

Inclusive and environment-friendly growth is key to creating new sources of economic dynamism amidst the persisting global uncertainty, says the flagship publication of ESCAP which estimates that economic policy uncertainty in the eurozone and the United States since the onset of the global crisis has shaved 3 per cent off regional GDP – a loss of $870 billion in output.

“The 2013 Survey reminds us that this is no time for complacency, as the need for a more inclusive and sustainable pattern of economic and social development continues to be critical,” United Nations Under-Secretary-General and Executive Secretary of ESCAP, Dr. Noeleen Heyzer said in her preface to the Survey.

Limited pick up in growth

The expected improvement in global demand arising from steady growth in the United States and the limited rebound in major emerging economies is projected to help raise developing Asia-Pacific growth to 6.0 per cent in 2013 from 5.6 per cent last year.

Turkey is studied in the South-South West Asia region in the Survey. It argues that the growth in Turkish economy slows as the global economy weakens again, inflationary pressures persist, slight increase in budget deficit is seen and current account deficit raises serious concern about its sustainability.

In Turkey, GDP growth is projected to pick up slightly to 3.8% in 2013, with some loosening of monetary policy, according to the Report.

“New normal” of lower growth underlines need to make development inclusive and sustainable

The Survey cautions that “much lower growth compared to recent years could become a new normal for many regional economies if present economic trends were to continue” and this could cause an estimated economic output loss of about $1.3 trillion by end-2017.

Long-term structural issues, such as rising inequality, energy and infrastructure shortages are compounding the regional slowdown and the Survey says the “structural solution to invigorating the domestic drivers of growth will lie in making the development process more inclusive and sustainable”.

With the region home to nearly two-third of the world’s poor and having more than a billion people with insecure livelihoods, the Survey highlights the economic benefits of social protection.

It makes a first-time estimation of the public investment requirement of a package of social protection and sustainable development policies comprising a job guarantee programme, a universal pension scheme, disability benefits, increased public health spending , universal school enrolment and universal access to modern sources of efficient energy.

Requiring between 5 and 8 per cent of GDP in many Asia-Pacific countries surveyed, this can be self-financed by most countries.

For the Executive Summary of the Report, please click here.

For the Briefing Notes of the Report, please click here.

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