Presentation from the Launch of the UN Economic and Social Survey of Asia and the Pacific 2015.

1. Launch of
ECONOMIC AND SOCIAL SURVEY
OF ASIA AND THE PACIFIC 2015
Shamshad Akhtar
Under-Secretary-General of the United Nations
and Executive Secretary of ESCAP

2. Key messages
• Policy focus on economic growth is necessary, but it is not sufficient
for achieving development.
– Policymakers need to internalize the aspects of inclusive growth and sustainable
development into their domestic policy frameworks.
• Economic growth in Asia-Pacific developing economies will
experience only a slight increase in 2015.
– Unless reforms are vigorously pursued, downside risks to the growth trajectory
could increase.
• Inflation has declined and is expected to remain low, leading to
interest rate reductions.
– Prudence, however, is required given the likely volatility in capital flows,
especially in economies with weak fundamentals.
• Economic growth has not been inclusive within countries.
– Inequality of income and of opportunity has risen between different geographies
and sections of society such as rural and urban areas and women and men.
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3. A moderate economic growth outlook
• Economic growth in developing
Asia and the Pacific is forecast
to rise only slightly to 5.9% in
2015 from 5.8% in 2014.
– this outlook is primarily associated
with domestic and intra-regional
factors.
• Economic growth potential in the
region is being held back by,
among others, two key
challenges:
– infrastructure shortages
– commodity dependence
• Fragile global economic
recovery also exerting drag on
growth prospects of the region.
8.8
9.6 10.1
6.4
5.3
8.9
7.2
5.4
6.0 5.8 5.9 5.9
2.8 3.1 2.8
0.1
-3.4
3.1
1.7
1.2 1.4
1.8
2.3 2.4
-4
0
4
8
12
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
RealGDPgrowth(percentage)
Developing Asia-Pacific economies (a)
Major global developed economies (b)
3

4. Relatively better growth outlooks for all
subregions except North and Central Asia
-4 -2 0 2 4 6 8 10
South-East Asia
South and South-West Asia
Pacific island developing economies
North and Central Asia
East and North-East Asia
2014 2015 2016
Real annual GDP growth (%)
4

5. Importance of addressing
infrastructure shortages
• Weaknesses in infrastructure is one of the key factors holding back
the region’s economic growth potential.
• Significant investment in infrastructure is required, not least to meet
the increasing demand due to growing incomes and populations
together with the requirements of rapid urbanization.
• Efforts are needed on multiple fronts, including increasing
government revenues, developing capital markets, and nurturing
public-private partnerships.
– Emergence of Asian Infrastructure Investment Bank is an important development
to meet the infrastructure deficit gap of the region.
• Need to remember that raising necessary finance is not the only
solution; capacity to assess feasibility of bankable projects and an
enabling legal and regulatory environment is also important.
5

6. Reducing negative implications of
excessive commodity-dependence
• Excessive commodity dependence can influence a host of
economic indicators such as inflation, exchange rates, and budget
and current account deficits
• To mitigate the negative implications, countries could consider:
– targeting a cyclically-adjusted fiscal balance that takes into account
the potential revenue shocks due to large movements in commodity
prices.
– Developing a production-oriented index to control inflation as it is more
appropriate for countries susceptible to terms-of-trade shocks.
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Countries where commodity export-to-GDP ratio exceeded 10% in 2000-2013
30% plus Azerbaijan (‐4.3), Brunei Darussalam (4.4), Islamic Republic of Iran (2.8),
Kazakhstan (‐4.5), Mongolia (‐5.7), Myanmar (0.2), Papua New Guinea (10.4),
Timor‐Leste (1.4) and Turkmenistan (‐1.2)
10‐30% Australia (0.3), Bhutan (2.6), Indonesia (‐0.2), Malaysia (0.3), the Russian
Federation (‐4.3) and Viet Nam (0.7)
Note: Figures in parentheses show the percentage point difference between real GDP growth in 2013 and the 2015
forecast.

7. Outlook for trade, and thus an external
demand led growth, remains challenging
• Exports of the region have been declining for few years now; outlook
is not much different, primarily due to fragile economic recovery in
most advanced economies.
• Similarly, sluggish import demand of major economies in the region
will impact intraregional trade, and thus the overall trade outlook.
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8. Inflation dynamics
• Inflation forecast to decline in 2015 to 3.3% in 2015 from 3.9% in
2014, driven by lower international oil prices and reduced demand
pressure in export-led economies.
• For net oil importing economies, the decline in oil prices is and will
remain beneficial. But this is not the case for oil exporting economies,
due to pressure on their currencies and thus imported inflation.
8

9. Monetary policy – balance benign inflation
outlook and likely capital flow volatility
9
• Declining inflation has provided space for an accommodative monetary
policy stance in many economies of the region.
• At the same time, likely increase in interest rates in United States is
encouraging capital outflows from region; countries with weaker
macroeconomic fundamentals are likely to be most affected.
• This may necessitate higher interest rate by developing economies of
the region. Partly because of this, some economies are already
keeping real interest rates at a relatively higher level.
• ESCAP analysis shows that countries with better fundamentals will
have to increase interest rates, if and when such a need arises, less to
defend against capital outflows – positive impact on GDP growth of up
to 0.5 percentage points
• Macroprudential policies offer an important complementary method of
managing capital flows while allowing governments to preserve
monetary policy flexibility and maintaining domestic financial stability.

10. Realizing inclusive growth
• Inclusiveness is typically measured using income-related
indicators.
• Yet, inclusiveness is a multidimensional concept that goes beyond
economic measures. It should also capture social and environment
dimensions of development.
• Inclusiveness is broadly defined in terms of:
(a) increasing the average standard of living of the population;
(b) reducing income inequality;
(c) reducing levels of extreme poverty and
(d) expanding and broadening equality in opportunities (social
and environment related)
“We, the Heads of State and Government and high-level
representatives, renew our commitment … to ensuring the
promotion of an economically, socially and environmentally
sustainable future… for present and future generations. “
(Rio+20)
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11. Economic inclusiveness
• Rates of extreme poverty have declined.
• Yet, significant differences remain between rural/urban sectors and
genders.
70.0 70.0
48.5
31.5
27.4
11.9
1.7
7.8 8.0 6.5
1.7 2.6
0
10
20
30
40
50
60
70
80
Asia-Pacific
South-East
Asia
Pacific
Southand
South-West
Asia
Eastand
North-East
Asia
Northand
CentralAsia
Proportionoffemalepopulation
0
5
10
15
20
25
30
35
40
China India Indonesia
Povertyheadcountratio,inpercentageofpopulation
Rural Urban
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12. Economic inclusiveness
• Income inequality has increased.
• Lack of productive employment is one of the major reasons for the
high incidence of poverty in many developing countries.
0 20 40 60 80 100
Cambodia
Lao PDR
Thailand
Viet Nam
Bhutan
Malaysia
Mongolia
Republic of Korea
India
Bangladesh
Nepal
Pakistan
Azerbaijan
Kazakhstan
Maldives
Indonesia
Kyrgyzstan
Philippines
Percentage
Vulnerable employment Unemployment
12
0 10 20 30 40 50 60
Malaysia
Philippines
China
Russian…
Turkey
Thailand
Iran (Isl.Rep)
Indonesia
Lao PDR
Mongolia
Sri Lanka
Cambodia
Viet Nam
India
Azerbaijan
Kyrgyzstan
Bangladesh
Pakistan
Kazakhstan
Gini coefficient
1990 2012

13. Social inclusiveness
0
10
20
30
40
50
60
70
80
90
100
SriLanka
(2009-10)
VietNam
(2008)
Indonesia
(2009)
Philippines
(2007)
Bhutan
(2007)
Bangladesh
(2000)
Pakistan
(2007-08)
Opportunity index for children
Primary school age groud Secondary school age group
0
10
20
30
40
50
60
70
80
90
100
Azerbaijan
Bangladesh
Cambodia
India
Indonesia
Nepal
Pakistan
VietNam
Percentage
Secondary school attendance
Males Urban Males Rural Females Urban Females Rural
• Enrolment rates diverge across sector and gender and across income
quintiles.
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14. Social inclusiveness
Access, affordability and
acceptability of health services
are critical in identifying whether
growth is inclusive.
• Large spatial differences
characterize provision of
health services.
• High ‘out-of-pocket payments’
affect particularly low-income
persons.
• Services may note be socially
or culturally appropriate,
particularly when related to
sexual and reproductive health
services.
0
10
20
30
40
50
60
70
80
90
100
Poorest 20% Q2 Q3 Q4 Richest 20%Percentage
Income quintiles
Percentage of skilled birth attendance in
three years preceding survey, by income
quintile
Bangladesh Cambodia India
Indonesia Nepal Pakistan
Philippines Timor-Leste Turkey
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15. Environmental inclusiveness
• Being less resilient, the poor
are particularly affected by
environmental degradation.
• Environmental degradation
can also be an outcome of
economic inequality.
• Important progress in
increasing access to improved
water, yet disparities still exist
between rural and urban
areas.
• Achievements in access to
improved sanitation have been
relatively moderate.
0
10
20
30
40
50
60
70
80
90
East and
North-East
Asia
North and
Central
Asia
Pacific South and
South-West
Asia
South-East
Asia
Percentageofpopulation
Access to improved sanitation
1990 2012
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16. Environmental inclusiveness
• At least 620 million people lack
access to electricity in the
region.
• Large disparities between rural
and urban sectors.
• More than 1 million premature
deaths annually in India and
China can be attributed to
exposure to household air
pollution.
0% 20% 40% 60% 80% 100%
DPRK
Cambodia
Myanmar
Bangladesh
Philippines
Pakistan
Indonesia
Lao PDR
Nepal
Mongolia
Sri Lanka
Access to electricity, 2012
Rural electrification rate (%) Urban electrification rate (%)
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17. ESCAP Inclusiveness Index
The ESCAP Inclusiveness Index
captures 15 indicators, covering
economic, social and
environmental dimensions of
development.
Overall, growth has been
inclusive.
Yet, some countries have made
more progress than others.
Growth has not been inclusive
within countries.
Intergenerational inequities can
be perpetuated if large and
widening income inequalities are
not addressed.
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18. Policy recommendations
1. Address the neglect of the rural sector.
• Increase agricultural productivity by focusing on quality and
standards, investments in R&D.
• Develop non-farm sector through rural industrialization.
2. Strengthen financial development, foster financial inclusion.
3. Foster creation of small and medium-sized enterprises.
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19. Policy recommendations
4. Strengthen the developmental role of macroeconomic policy by
making existing expenditure more development-oriented:
• Reduce non-development expenditure (defence, energy
subsidies).
• Increase access to and the affordability of health systems.
• Strengthen social protection programmes.
• Expand investment in education.
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