BANGKOK — The Asia-Pacific region’s economic recovery from COVID and other global shocks must be anchored in an inclusive “new social contract” to protect vulnerable people in the years to come, according to a new economic and social study by the region, released Tuesday by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
In addition to the pandemic, the report shows that regional economies face “several downside risks”, ESCAP said in a press release, linked to the global supply chain failure, “rising pressures inflationary pressures, prospects for higher interest rates, shrinking fiscal space”. , and the emerging global economic fallout from Russia’s continued invasion of Ukraine.
Economic growth in developing countries in the wider region is expected to fall to 4.5% in 2022 and 5% in 2023, from an estimated growth rate of 7.1% in 2021.
The cumulative output loss due to COVID-19 for developing economies in the region between 2020 and today is estimated at nearly $2 trillion.
The survey warns against cuts in public spending on health, education and social protection “to protect the development gains of the past decades and prevent a worsening of inequalities in the region”.
The pandemic has deprived more than 820 million informal workers in the ESCAP region and more than 70 million children from low-income households of adequate access to income and education, the report notes.
“This outcome will have adverse effects on the future earning potential of these people and on overall productivity growth,” ESCAP said, as an additional 85 million people in Asia and the Pacific had already been pushed back into the extreme poverty in 2021.
“As developing countries in the region move forward to learn to live with COVID-19, balancing public health protection and livelihoods, it is time to lay the foundations for a future. fairer equal opportunities and inclusive outcomes,” said Armida Salsiah Alisjahbana. , Executive Secretary of ESCAP.
The Commission recommends a “three-pronged policy agenda” aimed at shaping an inclusive economy for the region.
First, instead of cuts, developing countries in the region need to direct public spending towards basic universal health coverage, push further towards universal primary and secondary education, and expand social protection coverage.
The committee argues that “smart” fiscal policies can improve the overall efficiency and impact of public spending and revenue collection. At the same time, new sources of revenue should be explored, such as taxing the digital economy, as well as shifting the tax burden to high-income households.
Second, the 2022 Survey argues that central banks in the region can and should direct their traditional monetary policy towards promoting 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 access, and incentivize financial instruments. more innovative financial institutions to guarantee a social safety net.
Third, governments can also proactively guide, shape and manage the process of structural economic transformation, which is increasingly driven by the digital robotics and AI revolution, for more inclusive outcomes.
This includes support for the development of labour-intensive technologies, inclusive access to good quality education, reskilling, building labor negotiation skills 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 informing policy-making in the region, first published in 1947. — UN News