The good news first. By the middle of this century, an additional 3 billion Asians including people from India could enjoy higher living standards. However, that can happen only if Asia sustains its present growth momentum and addresses daunting multi-generational challenges and risks, says a new report commissioned by the Asian Development Bank (ADB).
The draft report says that as the global economy’s centre of gravity shifts toward Asia, the region could account for about half of global output in 2050, up from the current 27%, as well as half of global trade and investment.
The overview of the draft report, ?Asia 2050: Realising the Asian Century?, was unveiled at the ADB?s 44th annual meeting in Hanoi, Vietnam, and will be a topic of discussion among participants at the Governors? Seminar, including the finance ministers of Bangladesh, France, India and South Korea, the China?s deputy finance minister, the governor of the State Bank of Vietnam, Japan’s parliamentary secretary for finance and ADB president Haruhiko Kuroda.
The draft report compares the potential outcomes for Asia under two competing scenarios: The Asian century and the middle-income trap. In the more optimistic Asian century assumption, the region?s GDP would soar to $148 trillion and account for 51% of global output in 2050. On a purchasing power parity basis, GDP per capita in Asia would rise to $38,600, compared with the projected 2050 global average of $36,600.
The alternative outlook assumes that Asia’s fast-growing economies ? China, India, Indonesia, and Vietnam ? will fall into the middle-income trap of slowing growth rates and stagnating income levels over the next 5-10 years. Furthermore, none of Asia’s slow-growing economies would manage to accelerate its growth rate under this scenario. If these events occur, Asia would account for only 32%, or $61 trillion of global GDP in 2050. On a purchasing power parity basis, GDP per capita would rise to only $20,300, or just over half of that under the Asian century scenario.
Then there is the great challenge of governance and institution-building, an Achilles’ heel for most Asian economies. Asia must modernise its governance systems and retool its institutions to ensure transparency, accountability and the enforceability of rules and regulations, the draft report says. To meet these challenges, Asian leaders need to devise bold and innovative national policies while pursuing regional and global cooperation to successfully manage regional public goods, energy security, infrastructure connectivity, food supplies and water resources, and to maintain long-term peace and stability.
Under the Asian century scenario, almost 3 billion additional Asians would enjoy the fruits of prosperity at least one generation earlier than under the middle-income trap scenario.
While Asia has made significant strides in tackling income poverty, non-income poverty still remains pervasive. For example, half of all Asians live without basic sanitation while 900 million people in the region have no access to electricity.
The draft report highlights the challenges and risks for Asia in achieving its development potential and outlines the corresponding strategic decisions and actions facing policymakers.