Asia’s rapid growth is leaving millions behind, says the Asian Development Bank (ADB) in its annual report published today.
The Asian Development Outlook 2012 also forecasts rising economic growth for Myanmar, which “needs to embark on a comprehensive program of reforms to realize its potential and reduce widespread poverty.”
The widening gap between rich and poor threatens to undermine the region’s stability, says the report. “Another 240 million people could have been lifted out of poverty over the past 20 years if inequality had remained stable instead of increasing as it has since the 1990s,” said Changyong Rhee, ADB’s chief economist.
ADB projects 6 percent GDP growth for Myanmar in fiscal year 2012, up from an estimated 5.5 percent in 2011. Myanmar’s economic prospects are bolstered by recent policy reforms and projected increases in gas exports.
“Myanmar is making a lot of the right moves to revitalize its economy, laying a foundation for further foreign investment and commodity exports with currency changes, land reforms and tax incentives,” said Craig Steffensen, ADB’s Thailand country director.
“For Myanmar, to ensure growth is sustainable and benefits all of the country’s people, the government will have to accelerate reforms and enhance investment in education, health and infrastructure.”
Other report conclusions include:
Mongolia: The economy is developing rapidly, but fiscal policy must balance the need for macroeconomic stability and support for long-term economic growth that benefits all Mongolians.
Indonesia: Lagging development of infrastructure, especially in the transport and energy sectors, continues to be a major constraint to economic growth.
Cambodia: Mismatches in the human capital and skills markets, which have intensified over the last few years, highlight the need to bring schools and vocational training institutes closer to the business community, in order to promote quality and relevance to market demand.
China: Rising income inequality and strains on the environment highlight the need to continue the push for a more balanced, eco-friendly growth model.
India: An expected easing in monetary policy after a long period of persistent inflation and rate hikes might help stimulate investment over the coming year, but its impact is likely to be limited until obstacles like land purchase and environmental regulations, which are currently deterring both domestic and foreign investors, are addressed.
Philippines: Slow progress on key Millennium Development Goals, rising income inequality, an over-reliance on electronics exports and remittances, and industrial stagnation remain as drags on the economy. The failure of industry to move up the value chain because of weak infrastructure and a cumbersome business environment has limited the creation of higher paying jobs needed to reduce poverty.
Malaysia: The cost of government subsidies on fuel, staple foods, electricity, health and education has climbed from 1.3 percent of total spending in 1990 to 14.3 percent in 2011. Subsidies suppress inflation, but reduce budget funding available for social and economic development, and distort resource allocation. The vast bulk of the subsidies benefit consumers, students, and companies in general, rather than the poor, because of inadequate targeting.
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