Statement at Launch of the Economic and Social Survey of Asia and the Pacific 2017: Year-end Update
The Economic and Social Survey for Asia and the Pacific provides a macroeconomic assessment of the region and offers policy options for achieving the Sustainable Development Goals, particularly Goal 8, which calls for “sustained, inclusive and sustainable economic growth.”
In 2016, the global economic environment was uncertain and global trade was at a record low. In 2017 economic growth is set to pick up modestly, forecast to stand at 5.4 per cent in Asia and Pacific developing countries. It is supported by domestic consumption, accommodative domestic policies, and an upswing in external demand as performance in the euro area and the United States improves. Low inflation, low interest rates and growing consumer confidence drove domestic private consumption.
Looking ahead to 2018, the economic outlook is stable and should continue to be driven by growing domestic demand. The positive base effect of the 2017 uptick in trade is likely to diminish in 2018. Yet trade is still expected to continue at a healthy pace, with the region’s volume of exports projected to grow by 3.5%. Private investment growth remained weak in most economies. Challenges and uncertainties persist for the coming year, however, unless the pace of structural reforms gains momentum, near term performance will remain close to 2017. Excess capacity and low capacity use in certain industrial sectors, and debt overhang in the corporate and banking sectors, continue to weigh on growth. Complicating further the 2018 outlook are the risks of trade protectionism, a tightening in global financial conditions, geopolitical tensions and vulnerabilities from natural disasters. These risks mean there is no room for complacency. The high debt levels in some major economies combined with potential volatility and capital outflows resulting from interest rate increases in the United States, call for monetary policy authorities to continue to navigate through deleveraging supported by stronger macroprudential regulation and supervision frameworks.
To achieve sustained and stable economic growth, productivity gains are vital, accompanied by commensurate increases in real wages. We must take advantage of stable economic conditions and progress towards ensuring socially inclusive and environmentally sustainable economies. Unless accompanied by an expansion of decent jobs and redistributive policies, we will continue to see inequality rise and little progress towards eliminating poverty. Without a concerted effort, economic growth will continue to come at significant, and often irreversible, environmental costs. In this regard, the Update reemphasizes that a wide array of policies and reforms could improve the prospects for achieving the 2030 Agenda for Sustainable Development, and that good governance should underpin such policies and reforms. Fiscal policy could play an instrumental role in lifting domestic demand, “crowding in” private investment and supporting development goals.
Most countries in the region appear to have manageable fiscal positions. To meet financing requirements for sustainable development, the Survey Update argues the fiscal space accounting for debt sustainability could be enlarged, including through innovative ways to mobilize fiscal resources, broadening participation of the private sector, and enhance deepening of capital markets. The Update also shows technology carries the potential to improve governance and fiscal management. For instance, the update highlights modern technologies can help Governments improve tax administration and compliance, and the implementation of direct benefit transfers while improving public expenditure efficiency. Work in all these areas is needed to close the wide investment gap needed to effectively pursue the 2030 Agenda for Sustainable Development across Asia and the Pacific.
That is just a snapshot of the report’s findings. I will now handover to the MPFD Director, Mr. Hamza Malik, who will share some further details.