Asia could be as wealthy as Europe by the middle of the century, but only if it tackles key challenges from inequality and corruption to climate change, an Asian Development Bank (ADB) study said yesterday.
On current trends, Asia will make up half the world’s economic output by 2050, and another 3 billion people will have joined the ranks of the affluent, their incomes matching those of Europe today, the report said.
However, the ADB study also pointed to a paradox — that the world’s fastest-growing region, dubbed “Factory Asia,” is still home to almost half the world’s absolute poor, who earn less than US$1.25 a day.
Group of Seven
Asia’s decades-long march to prosperity, the study said, is being led by seven economies with more than 3 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 US$17 trillion last year to US$174 trillion in 2050, with per capita GDP of US$40,800 in current terms.
However, for Asia’s rise to be sustainable, 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 said that developing Asia had led the way out of the global financial crisis and recession with a V-shaped recovery.
On current trends, the study said: “By 2050 its per capita income could rise sixfold in purchasing power parity terms to reach Europe’s levels today. It would make some 3 billion additional Asians affluent by current standards.
“By nearly doubling its share of global GDP to 52 percent by 2050, Asia would regain the dominant economic position it held some 300 years ago, before the industrial revolution,” it said.
However, the study warned that Asia’s rise was by no means inevitable.
“Many see the ascendancy of Asia — or ‘the Asian Century’ — as being on autopilot, with the region gliding smoothly to its rightful place in destiny,” Kuroda wrote in a foreword to the report.
“But complacency would be a mistake. While an Asian century is certainly plausible, it is not preordained,” he said.
The report 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.
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 finite natural resources.
Climate change is “a wild card for Asian development,” said the study, adding that Asia is already hit by more storms, floods and other natural disasters than any other region.
“Climate change will affect everyone. With over half the world’s population, Asia has more at stake than any other region,” the study said.