In addition to the pandemic, the report shows that regional economies face “several downside risks”. ESCAP says in a press releaseassociated with an unsustainable global supply chain, “rising inflationary pressures, prospects for higher interest rates, shrinking fiscal space”, andthe growing global economic consequences of Russia’s ongoing invasion of Ukraine.
Economic growth in the developing countries of the wider region is projected to fall to 4.5% in 2022 and 5% in 2023 compared to a projected growth rate of 7.1% in 2021..
$2 trillion loss
Cumulative output loss due to COVID-19 for developing countries in the region between 2020 and now is estimated at nearly $2 trillion.
The study warns against cutting public spending on health, education and social protection “to protect the development gains of recent decades and prevent further deepening of inequalities in the region.”
The report notes that the pandemic has deprived more than 820 million informal workers in the ESCAP region and more than 70 million children from poor families from adequate access to income and education.
“This outcome will have a negative impact on the future earnings potential of these people and overall productivity growth,” ESCAP said, as another 85 million people in Asia and the Pacific are already pushed into extreme poverty in 2021.
“As developing countries in the region move forward learning to live with COVID-19, balancing public health protection and livelihoods, it’s time to lay the foundations for a fairer future of equal opportunity and inclusive outcomes”, said Armida Salsia Alisjabana, Executive Secretary of ESCAP.
Three Point Action Plan
The Commission recommends a “three-pronged political agenda” aimed at building an inclusive economy in the region.
First, instead of abbreviations, development countries in the region should reorient public spending towards basic universal health coverageachieve universal primary and secondary education and expand social protection coverage.
The Commission argues that smart fiscal policy can improve the overall efficiency and impact of government spending and revenue collection. At the same time, new sources of income should be explored, such as taxation of the digital economyalong with shifting the tax burden to high-income households.
Second, the 2022 Review argues that central banks in the region can and should change their traditional monetary policy towards encouraging inclusive development. While remaining focused on keeping inflation low and stable, central banks can invest some of their official reserves in social bonds. explore how a central bank digital currency can improve financial accessand to encourage more innovative financial instruments to provide a social safety net.
Third, governments can also actively guide, shape and manage the process of structural economic transformation, which is increasingly driven by the digital robot and artificial intelligence revolution, for more inclusive outcomes.
This includes support for the development of labour-intensive technologies, inclusive access to quality education, retraining, capacity building for labor negotiations and social protection floors.
The Economic and Social Survey of Asia and the Pacific is the United Nations’ oldest and most comprehensive annual socio-economic survey of information for policymaking in the region, first published in 1947.