MANILA – Next year will present significant challenges and new responsibilities – political, economic, and social – for developing Asia. The path to sustainable, inclusive economic growth will be difficult, but it will also entail exciting opportunities for Asia and the rest of the world.
Five years into the Great Recession, recovery remains elusive in advanced economies. Europe’s leaders must make tough decisions in order to resolve the euro crisis and revive growth. And, although the United States is beginning to show signs of economic recovery, the country faces a political stalemate over the so-called “fiscal cliff.” Indeed, while leading indicators may be stronger than they were a year ago, risks have only intensified.
In Asia, fiscal prudence allowed the stimulus measures that were needed to revive global economic growth in 2010. But the economic transformation that has occurred over the last several decades has reached a crossroads. Notwithstanding a few low-income economies catching up, the years of double-digit GDP growth are unlikely to continue – particularly in China and India – owing to the anemic external environment, together with internal weaknesses.
Asia needs to adjust to a new era of more moderate growth, while addressing widespread inequality and improving sustainability. The unprecedented economic expansion that has lifted millions out of poverty has been accompanied by widening income disparities, as well as serious environmental damage. As a result, Asia now has two faces: a prosperous and growing middle class, and those who have yet to benefit from the region’s rapid economic development – and whose health and well-being is being adversely affected by acute problems like air and water pollution.