New Report: Asia facing long-term growth 'triple challenge'

LONDON, Jan. 27, 2022 — Asia is facing a triple policy challenge that could see even the region’s fastest-growing economies fall into the ‘middle-income trap’, according to new research by Asia House.

The report highlights Asia’s position at a crossroads, with countries’ trajectories towards becoming advanced economies at risk of being derailed by economic scarring from the COVID-19 crisis, the disruptive impact of climate change, and a slow pace of digitalisation.

Without urgent and robust policy action to address these challenges, Asia’s economies face being caught in a middle-income trap that hampers development and puts the region’s long-term growth at risk, the report finds. 

‘A shift is needed towards policies that specifically address both the immediate economic scarring of the pandemic and secure longer-term resilience and prosperity,’ the report recommends.

‘For the 21st century to become the Asian Century, with Asia’s economies set to take a share of over half of global GDP by 2050, only a determined effort by the authorities to fill an evident policy gap will enable growth to continue at the required levels. Adopting a trio of priorities now will enable a robust economic tomorrow: green finance, digitalisation and enhanced regional cooperation.’

China leads in readiness!

The London-based think tank assessed eight key economies in Asia across metrics conducive to meeting these challenges. In two new indices published today, Asia House analyses the performance of China, India, Indonesia, Japan, Malaysia, the Philippines, Thailand, and Vietnam in the critical areas of green finance and digitalisation readiness – areas that will unlock future productivity and enable sustainable growth.

China leads the Asia House Economic Readiness Indices, but will see economic growth slow in 2022 due to the ongoing disruption of COVID-19. While India is expected to be the world’s fastest-growing economy this year, its ranks lowest for digital readiness out of the eight economies assessed. Closing its digital divide will be essential for its long-term growth.

Japan ranks second across both indices, and is likely to experience a moderate acceleration in growth in 2022, but authorities must speed up digitalisation efforts, the report finds. Within Southeast Asia, Malaysia and Indonesia lead in green finance readiness and digital transformation respectively.

View the Asia House Economic Readiness Indices in the Executive Summary here. The indices form part of the inaugural Asia House Annual Outlook, published by the think tank to track key economic trends across Asia and provide a forecast for the region’s growth.