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The average economic growth rate of Asia-Pacific developing economies this year is 5.9%, and the recovery will be K-shaped

By: jack Nov. 19,2021
In a newly released report, the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) forecasts average economic growth of 5.9 percent in developing Asia-Pacific economies in 2021 and 5 percent in 2022, but growth is expected to be K-shaped.

  In the report, titled Economic and Social Survey of Asia and the Pacific 2021: Towards a More Resilient Economy after the New Coronavirus Epidemic ("the report"), ESCAP says that poorer economies and more vulnerable groups may be marginalized in the post-epidemic recovery and transition process.

  More synchronized vaccination programs for new crowns needed

  ESCAP's report, published annually since 1947, analyzes the progress of this region's development in the social and economic spheres and provides policy guidance on the current socioeconomic issues and challenges facing the region.

  This time, ESCAP writes in the report that the impact of the Newcastle pneumonia epidemic may increase the number of people in the Asia-Pacific region who fall back into extreme poverty and live on less than US$1.90 per day by 89 million in 2020; in addition, the total number of work hours lost in the Asia-Pacific region due to the epidemic in 2020 is equivalent to 140 million full-time jobs, while the severe disruption of economic activities and education caused by the epidemic may further The epidemic's severe disruption of economic activity and education could lead to further human resource and productivity losses.

  To achieve a stronger and more inclusive recovery, the report says, Asia-Pacific countries urgently need to expand regional cooperation and implement more synchronized vaccination programs for the new crown. At the same time, the report recommends sustained fiscal and monetary policy support to avoid long-term economic damage from prematurely tightening stimulus measures.

  In addition to the epidemic, the report also examines other risks facing the Asia-Pacific region, such as natural disasters, financial crises and disease epidemics.

  The report notes that negative shocks in both economic and non-economic areas can lead to permanent economic, social and environmental losses. Countries must therefore adopt a more comprehensive approach to building resilience in order to better cope with future shocks.

  Call for reform of the international debt architecture

  ESCAP's report, entitled "Building a Better Future," also offers a package of policy recommendations to make countries more resilient in the wake of the epidemic, ensure universal health coverage and universal social protection, close the digital divide, and consolidate climate response and clean energy action.

  The report projects that in the long term, the policies will reduce the number of people living in poverty in the Asia-Pacific region by nearly 180 million, while helping to reduce carbon emissions by nearly 30 percent. Combined with bold policy actions such as ending fossil fuel subsidies and introducing a carbon tax, these recommendations would result in only a modest fiscal and debt burden.

  The report also recommends financial solutions such as debt-development swaps (i.e., offsetting debt through spending and investment in development) for countries with special needs and more limited fiscal space, and calls on the international community to provide assistance to LDCs with large resilience gaps.

In a policy brief released on the 29th, UN Secretary-General Guterres also noted that countries need to address short-term liquidity constraints and debt backlogs, while reforming the international debt architecture to create space for investment in crisis response, sustainable development and climate action.

  Guterres said the fiscal impact of the epidemic, which has lasted more than a year, is causing debt distress in a growing number of countries and severely limiting the ability of many to invest in economic recovery, sustainable development goals, and much-needed climate action.

  Since the outbreak, 42 of the economies borrowing from global capital markets have seen their sovereign ratings decline, including six developed countries, 27 emerging market economies, and nine least developed countries, the brief said. The decline in sovereign ratings could lead to higher borrowing costs, further exacerbating the risk of an unsustainable debt crisis for the countries concerned, with developing countries being particularly affected.

  Guterres stressed that "unless the international community takes decisive action in addressing the debt and liquidity challenges, many developing countries could experience another 'lost decade'."

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