Home / Asia / Sharing Asia-Pacific’s growing wealth
Sharing Asia-Pacific's growing wealth

Sharing Asia-Pacific’s growing wealth

East Asia is now home to six of the world’s 10 megacities, according to the World Bank. East Asia and the Pacific is the world’s most rapidly urbanising region with an average urbanisation rate of 3 percent per year. That has helped lift 655 million people out of poverty in the past two decades. By 2018, half of the region’s population – over 1.2 billion people in total – will be living in cities.

The bank’s latest East Asia and Pacific Economic Update, published this month, notes an uptick in growth from earlier forecasts, helped by 6.7pc expansion in China, equal to last year and better than expected, given all the talk of a slowdown. Large South East Asian economies and the rest of Asia will see a growth of 5.1pc this year and 5.2pc next year, up from 4.9pc in 2016.

Stronger growth in advanced economies, a moderate recovery in commodity prices and a revival of global trade growth are all favourable external factors that the World Bank says will support 6.4pc expansion for the economies of developing East Asia and the Pacific this year. China, however, could see growth slide to 6.4pc in 2018 as Beijing continues to shift away from a reliance on investment and more toward domestic consumption.

Stronger exports are helping Thailand and Malaysia expand more rapidly, says the World Bank report, while healthy tourism in Thailand and increased investment in Malaysia provide added impetus.

Indonesia, meanwhile, is benefiting from gains in real wages that have driven strong domestic consumption, while Vietnam is enjoying a rebound in agriculture and manufacturing. Growth in Laos and Cambodia is moderating compared to 2016; however, power sector expansion in Laos and growth in trade and foreign direct investment in Cambodia are on a higher pace than other countries in this region.

Globally, the World Trade Organisation has lifted its merchandise trade volume growth forecast for 2017 substantially, to 3.6pc from 2.4pc earlier, well above the lacklustre 1.3pc increase in 2016. It attributes the change to a resurgence of Asian trade flows as intra-regional shipments picked up and as import demand in North America recovered after stalling in 2016.

Risks, challenges persist

Everything seems rosy. Yet short-term risks and long-term challenges persist. While urbanisation continues at a rapid rate, infrastructure development, job markets and services in the region cannot catch up with the pace. Widening inequality could hamper economic growth and lead to social divisions; the region still houses a slum population of 250 million people. While skyscrapers rise across big cities, giant Asian businesses acquire assets in foreign countries and the wealth of Asian millionaires keeps spiralling, too many low-income people in the region still have poor-quality housing, limited access to basic services and face risks from hazards such as flooding.

Despite notable success in reducing poverty over the last few decades, high and rising inequality remains a growing concern. Statistics show that 75 million people in this part of the world live on less than US$3.10 (K4195) a day. Critical challenges faced by the urban poor include lack of access to jobs, affordable housing, public transport and other fundamental infrastructure.

In Indonesia and the Philippines, 27pc and 21pc of the urban population, respectively, have no access to effective sanitation facilities. Slum residents are also more at risk of disasters, as many live in low-lying flood-prone areas.

Some might say that inequality is a fact of life to some extent. But shouldn’t thoughtful policy creation and implementation help address these challenges and sustain economic growth in the long term? At the same time, better education and quality of life for the poor could prevent wider social divisions and thus reduce economic insecurity.

The growth in tourism income and trade, especially border trade, along with rising construction activity if well managed, could provide better job opportunities for low-income people, notably those who live along borders. Policies should be adaptable to specific circumstances, recognise the rights of all citizens in cities, target marginalised groups, strengthen local governments and encourage citizen engagement.

In the longer term, reforms in tourism, labour mobility and the knowledge economy could lead to significantly higher incomes, more employment and government revenue. Certainly, solutions for inclusive urban growth are not one-size-fits-all, but they are necessary for the greater good.

– Bangkok Post

Nareerat Wiriyapong is acting Asia Focus editor at the Bangkok Post

Related Post