ADB sees Hong Kong incomes leading the way as global trade focus switches to
Average incomes in Hong Kong are set to surpass those in the United States, according to a study by the Asian Development Bank.
During the next 25 years, incomes in Hong Kong would rise more than 16 per cent above those in the US and would be the highest of the emerging east Asian nations, the report said. They already were higher than per capita incomes in Britain and Australia.
By 2020, Singaporean incomes are expected to be about 7 per cent higher than those in the US, and Taiwan and Korea are expected to make substantial gains.
The report, Emerging Asia: Changes and Challenges, was released at the ADB's 30th annual conference here. It said that as Asian economies continued to catch up, growth rates would slow. But it said robust growth would continue, especially in South Asia, for the next three decades.
Growth rates in East Asia were likely to slow, but a Soviet Union-style collapse was unlikely.
'Continued rapid growth in Asia will challenge the rest of the world as the balance of economic activity increasingly shifts towards Asia,' the report said.
'Trade flows between Asia and the rest of the world will increase rapidly, posing significant, but manageable, shifts of employment and production within advanced economies.' The best way to manage economic pressures would be for all major economies to maintain flexibility in their domestic markets, it said.
The World Trade Organisation and regional groupings would be the cornerstone of the increasingly integrated global economy, which would see the focus of trade shift toward Asia as its growth outpaced that of industrialised countries.
However, continued high growth rates were not assured and misplaced government policy could upset the momentum.
'A turn towards protectionist policies around the world and a reduction in the growth of world trade could derail Asia's rapid growth,' the report said.
'Similarly, if Asia were to follow the path of much of Europe and the United States toward higher government spending and increased social welfare programmes, growth could be slowed.' The report posed a pessimistic scenario of weak mainland growth if authorities failed to carry out essential reforms.
Reforms could be derailed also by the growing divergence of incomes, both within urban areas and between rapidly growing coastal regions and the more slowly growing interior.
Increased integration with global markets would make Asian economies more vulnerable to economic disturbances elsewhere, particularly Asian capital markets.
'Asian capital markets are still relatively thin and are vulnerable to rapid swings in capital. Thus prudent macro-economic management is more important and more difficult than before. Policy-makers must distinguish between short-term and long-term capital flows and ensure that large capital inflows do not lead to over-valued exchange rates. Exchange rate, fiscal and monetary policies must be more co-ordinated than ever before.'