As the Asia-Pacific continues to power the global economy, we must ensure that growth is sustainable

The Asia-Pacific region remains the engine of the global economy, powering trade, investment and jobs. Two-thirds of the region’s economies grew faster in 2017 than the previous year and this is expected to continue in 2018. The region’s challenge now is ensuring this growth is robust, sustainable and mobilised to provide more development financing. It is certainly an opportunity to accelerate towards achieving the 2030 Agenda for Sustainable Development. 

Risks and challenges remain. Rising private and corporate debt, particularly in China and Southeast Asia, low or declining foreign exchange reserves in a few South Asian economies and trends in oil prices are among the chief concerns. Policy simulation for 18 countries suggests that a US$10 rise in the price of oil per barrel could dampen GDP growth by 0.14 to 0.4 per cent, widen external current account deficits by 0.5 to 1.0 percentage points and build inflationary pressures in oil-importing economies. Oil exporters, however, would be positively affected. 

These challenges come against the backdrop of looming trade protectionism. Inward-looking trade policies create uncertainty and entail widespread risks to the region’s exports, plus their backbone industries and labour markets. While prospects for the least developed countries in the region are close to 7 per cent, concerns persist given their inherent vulnerabilities to terms-of-trade shocks or exposure to natural disasters.  

The key questions are how we can collectively take advantage of the solid pace of economic expansion to facilitate and improve economies’ long-term prospects and mobilise development finance, and whether multilateral institutions like the World Trade Organisation members can resolve the global gridlock on international trade.