Stable outlook for emerging Asian economies: OECD

Tokyo

EMERGING Asian economies, led by China and India, should continue to enjoy "healthy" growth over the next three to four years, outpacing what is expected to remain "subdued" growth in the advanced economies, said the Organisation for Economic Cooperation and Development (OECD) on Thursday.

While generally upbeat about Asia's prospects, the Paris-based body said, however, that emerging Asia has had mixed success in building the institutions on which markets rely - such as the rule of law and the enforcement of contracts, tax and regulatory demands.

The forecast, made in the OECD's latest Economic Outlook for Southeast Asia, China and India and issued at the Asean Business & Investment Summit in Myanmar at the close of a series of Asean-related meetings there, said the region remained "exposed to domestic and external risks that made continued reform, regional integration and the strengthening of institutional capacities critical".

The OECD forecast the annual Gross Domestic Product (GDP) growth for the 10 Asean economies plus China and India to average 6.5 per cent between 2015 and 2019.

China's growth is forecast to slow to 6.8 per cent over this period, as it adjusts to changing demographics, a shift from investment to consumption-led growth and tackles its agricultural, environmental and educational challenges. Meanwhile, India's growth should remain stable at 6.7 per cent over the period, without factoring in any potential boost from the new Indian government's reform plans, the OECD said.

Growth momentum remains robust in the 10 Asean countries; economic growth is expected to average 5.6 per cent between 2015 and 2019, said the report.

It expects the large Asean-5 economies - Indonesia, Malaysia, the Philippines, Thailand and Vietnam - to sustain their growth momentum over the medium term, led by Indonesia at 6.0 per cent and the Philippines, at 6.2 per cent. "Economic prospects for Brunei and Singapore are stable, while those of Cambodia, Laos and Myanmar are set to speed ahead with average annual growth exceeding 7 per cent."

OECD deputy secretary-general Rintaro Tamaki said at the launch of the report that while emerging Asian economies showed resilience, the risks they remained exposed to included slowing external sources of demand and regional political instability.

The report said: "Further accelerating the process of regional integration to build the Asean Economic Community by 2015 is necessary, as is building the domestic capacities in public sectors to support the implementation of policies that will foster growth and development.

"Strengthened institutional capacities and effective governments are needed across the region to foster sustainable and inclusive growth." National medium-term development plans for countries in the region have identified government priorities, but the OECD observed that "performance in turning these targets into results has varied greatly between countries and policy areas within countries".

For example, Indonesia's National Medium-term Development Plan and the Philippines' Development Plan have contributed to strong economic performances in both countries, but challenges have remained in reducing inequalities.

The OECD added that public-sector reforms have made substantial progress in South-east Asia, China and India, though many countries in the region needed to improve on their ranking on the Government Effectiveness Index and other measures of public-sector performance.