Digitalisation key to sustaining growth in Emerging Asia, says new report
Digitalisation can foster continued growth in Emerging Asia (the ten member countries of the Association of Southeast Asian Nations, China and India) over the medium term, according to the OECD Development Centre’s Economic Outlook for Southeast Asia, China and India 2018 (preliminary version).
GDP growth in Emerging Asia is expected to remain robust over the medium-term on the back of resilient domestic demand, steady investment and trade recovery. Continuing the 2016 trend, annual growth in Emerging Asia, in particular ASEAN, is projected to keep a steady pace in 2017. Growth in China and ASEAN is expected to pick up due to a strong rebound in trade and resilient domestic consumption, while India’s GDP growth is anticipated to nudge down due to tax and monetary reforms. Assuming that trade momentum holds, domestic reforms continue, and governments deliver on their infrastructure programmes, Emerging Asia is expected to post 6.3% growth on average between 2018 and 2022. Southeast Asia’s growth should also remain strong at 5.2 % over the same period.
According to the Outlook, the main risks to growth include the possibility of a more rapid monetary policy contraction in advanced economies; broadening of trade restrictions globally, coupled with limited progress in regional trade agreements; and the rapid rise in private sector debt.
“Emerging Asia cannot afford to miss out on the transformative power of digitalisation”, said Mario Pezzini, Director of the OECD Development Centre and Special Advisor to the OECD Secretary-General on Development, while launching the report at the 2017 ASEAN Business and Investment Summit, which also marks the 50-year anniversary of the regional Organisation.
A special Outlook chapter documents the impact of digitalisation on Emerging Asia, including the expansion of existing industries and the emergence of new ones, such as electronics manufacturing, software development and ICT (Information and Communication Technology) in Viet Nam; business and knowledge process outsourcing in the Philippines; and mobile payments in China. ICT services embodied in manufacturing and services account for a considerable share of the value of some countries’ exports – up to 14.9% of gross exports of services in India. Interestingly, it is primarily home-grown digital added value that is being embodied in services exports: on average, 85.3% of the computer and telecommunications services embodied in Emerging Asia’s services exports are domestic in origin.
For all the progress, however, access to the digital economy is uneven across and within Emerging Asian countries. For example, rates of Internet use, a prerequisite for participation in most aspects of the digital economy, vary between 81% of the population in Singapore and 22% in Lao PDR.
The Outlook notes that regional integration has deepened over the years in terms of trade, labour and finance. Initiatives promoting further integration will be crucial for maintaining the stability of growth in the region and for achieving the vision of a unified and seamless ASEAN Economic Community (AEC).
Source: Organization for Economic Co-operation and Development
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