Bumpy ride to prosperity

On current trends, Asia will make up half the world's economic output by 2050, and three billion people will have joined the ranks of the affluent, their incomes matching those of Europe today, says a new book commissioned by the Asian Development Bank (ADB). Asia's decades-long march to prosperity is being led by seven economies with more than three billion people between them - China, India, Indonesia, Japan, South Korea, Thailand and Malaysia.

Under the best-case scenario, Asia's combined GDP - also including poorer nations such as Laos and Pakistan - will rise from 17 trillion US dollars last year to 174 trillion US dollars in 2050, with per capita GDP of 40,800 US dollars in current terms. However, the study warns, the diverse region must emulate the past successes of top performers Japan, South Korea and Singapore by promoting inclusive and equitable growth.

"Asia is in the midst of a historic transformation." said the report Asia 2050: Realizing the Asian Century commissioned by the Manila-based ADB and launched by its president Haruhiko Kuroda in Tokyo. Kuroda has pointed out that developing Asia has led the way out of the global financial crisis and recession with a V-shaped recovery and that Asia may regain the dominant economic position it held some 300 years ago, before the industrial revolution.

Kuroda warns that Asia's rise is by no means inevitable as complacency would be a mistake. " While an Asian century is certainly plausible, it is not preordained." The report has warned that emerging economies face the risk of being stuck in the middle-income trap as bursts of rapid growth, driven by export-based manufacturing, are followed by periods of stagnation or decline.

A "Pefect Storm" is possible

The report highlights other key challenges - rising inequality within and between countries, poor governance and corruption in many of them, and intensifying regional competition for natural resources. In the worst case, it warns, Asia could face "a perfect storm" of bad macro-economic policies, unchecked financial sector exuberance, conflict, climate change, natural disasters, changing demography and weak governance.

Climate change is being dubbed as a wild card for Asian development because the region is already hit by more storms, floods and other natural disasters than any other region. Global warming threatens to melt the glaciers that run from the Himalayas and other mountain ranges to feed Asia's major rivers.

"Climate change will affect everyone. With over half the world's population, Asia has more at stake than any other region. The anticipated affluence of some three billion additional Asians will put tremendous pressure on the earth's finite natural resources" says the study. The study concludes that as an emerging leader, Asia must lead by example, by being a responsible global citizen.

AFP

Editor: Sachin Gaur