Asia is now the engine of global economic growth, given its young population, largely untapped natural resources and rising consumption, but the upward momentum could be disrupted by threats to peace and stability in the region, the World Economic Forum (WEF) on East Asia warned on Thursday.
Delegates to the 23rd WEF held in Manila called on countries claiming sovereignty over territories in the South China Sea (West Philippine Sea) must resolve their dispute to avoid derailing growth in the region.
“Its a mutual process. They have to sit down [and talk]. We need regional stability and peace. From an investor’s point of view, that is the number one concern,” Chu said.
Obstacles to growth
Countries in the region also face hurdles to improving infrastructure, investing in education and streamlining regulations.
“Growth is not preordained. It is something we need to work hard for,” Philippine Finance Secretary Cesar Purisima told delegates. He added that reducing corruption and good governance have been essential parts of the country’s strategy to improve its economic outlook and connectivity within the region.
The Philippine story is about coming back on track, he said, and “governance is its most important” element.
Countries in Asia must improve connectivity through reliable infrastructure, enhance the efficiency of their financial markets and strengthen their political and national institutions to ensure regional stability, Purisima added.
To increase economic connectivity within the region, Asean countries should develop both hard infrastructure—ports, roads and airports—as well as “soft” region’s labor market, which could improve economic connectivity.
Anthony Fernandes, group chief executive officer of AirAsia Malaysia, said the upcoming Asean economic community offers massive potential and unlocking such potential requires bringing down not only formal regulatory obstacles to free trade but also “invisible” barriers.
“The fundamentals are definitely going our way. It’s an opportunity for the private sector to pump out growth. The potential for Asean business to grow is enormous,” he said.
Lee Il-Houng, G20 Sherpa, ambassador for international cooperation under the Ministry of Foreign Affairs of South Korea said a lingering challenge to long-term growth is persistent income inequality.
“Income inequality has been getting worse across the world for the past 30 years,” he said.
Lee said structural problems demand major systemic reform. On the supply side, there is a need for innovation in improving energy efficiency, and on the demand side, there is a need to strengthen the region’s middle-income population, he said.
“For Asia to remain on a sustainable path, you need to have a system that will allow growth of middle income countries to continue, a system that reduces income inequality,” he said.