To sustain growth, Asia must build resilience to risks

ASIA and the Pacific have been powerful drivers of global economic growth and poverty reduction in recent years. However, that position is under strain from increasing uncertainty in the world economy and the growing possibility of weak growth. In this environment, boosting resilience to the risks of economic, social and environmental shocks is a top priority in South-east Asia, and in Asia more broadly. Three major areas require particular attention.

First is fallout from weak global and regional economic growth. Integration with the global supply chain, for example, benefits the region, but it has also increased vulnerability to global volatility. As Asia grapples with slower growth, countries need to find new drivers while extracting extra mileage from existing industries by boosting productivity. Recently, India used business process outsourcing, a new source of economic dynamism.

It is important to remember that downturns can quickly reverse progress on poverty made over decades. For example, the sharp global food price increase in 2007 and 2008 kept or pushed an estimated 105 million people into poverty in low-income countries. Extreme poverty in Asia - based on a person living on less than US$1.90 a day in 2011 purchasing power parity - is just over 450 million people. More than 1.3 billion - those living close to the poverty line on less than US$3.10 a day - are at high risk of falling back into poverty.