Asian Economies Must Build Resilience to Growing Risks

Emerging risks and destabilisers as diverse as widening income inequality, slower growth, and climate change, are reshaping Asia’s economic landscape at such a rapid pace that governments must build far greater resilience into their national plans, says the Independent Evaluation at Asian Development Bank, ADB.

"The urgency for countries to adapt to the new environment is growing," concludes Independent Evaluation’s 2016 Annual Evaluation Review of ADB’s operations and challenges for the region.

Countries in Asia are already grappling with slower growth and falling international trade, and need to find new drivers for growth while extracting extra mileage from existing industries. Asia today is more exposed to external shocks through the closer integration of global markets. The region’s economic prospects are also increasingly linked to the ability of the People’s Republic of China and India to address their economic, environmental, and climate challenges.

"External shocks irrespective of their origin quickly push the vulnerable below the poverty line and the poor deeper into poverty," says Vinod Thomas, Director-General of Independent Evaluation.

Latest data for extreme poverty in Asia and the Pacific based on a person living on less than $1.90 a day in 2011 purchasing power parity terms, is just over 450 million people. More than 1.3 billion people, those living on less than $3.10 a day, are at high risk of falling back into poverty again because of their vulnerability to shocks and the proximity of their incomes to the poverty line. Meanwhile, inequality is rising in a number of the region’s more populous countries, and the provision of basic services is under severe pressure in some countries.

"Building resilience calls for quality investments in infrastructure and institutions. But it must go beyond buffering shocks and preventing contagion," says Thomas. "Countries must vigorously promote social inclusion and environmental sustainability, both involving private sector solutions, to ensure that Asia’s economic growth does not peter out."

The report warns that development gains can be worn away by the rising frequency and ferocity of natural disasters, and the degradation of the environment. As the benefits and costs of Asia’s growth are increasingly manifested in cities, Asia’s urban population is expected to nearly double from 1.6 billion in 2010 to 3.0 billion by 2050, while 13 of the world’s 23 megacities are located in the region, so addressing urban issues such as water supply, sanitation, and waste management will be key.

Source:WAM