Financing, climate change hinder AsPac economic expansion – ADB

MANILA, Philippines - The Asia-Pacific has continuously grown over the last five decades but challenges such as the need for financing, human-induced climate change, and regional cooperation remain, the Asian Development Bank said.

ADB vice president Stephen Groff, in a keynote speech delivered last week, said the region’s share in the global economic growth climbed sharply.

“It is not inconceivable that Asia and the Pacific’s share of world GDP (gross domestic product) could surpass 50 percent by the middle of the century,” Groff said. 

“Yet, against these gains, the region also faces daunting development challenges such as climate-induced natural disasters, intense competition for naturalresources, and growing inequality,” he added.

As countries prepare to set their post-2015 development agenda next month, Groff said the region will need more improved approaches to address continuing challenges like the high maternal mortality rate, while also confronting new ones such as rapid urbanization. He noted three main obstacles for the region going forward. 

The first challenge, he said would be financing the post-2015 development agenda as the cost is estimated to be around $1 trillion a year for the Asia-Pacific region.

But Groff stressed financing need not be from new sources as the region can use current public and private resources available.

“While fiscal revenues remain an important source of development finance, the largest sums are in fact in private hands,” he said, noting potential sources include savings, pension, and other sovereign wealth funds.

“So our first challenge is to redirect these resources toward the region’s development needs,” Groff said.

The “human-induced” climate change is the second threat to the region’s development and security, the ADB official said.

“Our rising population and expanding demands have strained the region’s resources, and the negative impacts are now evident in rising sea levels and increasingly devastating storms, drought, and floods, which reduce whatever assets the poor have, and render them even more vulnerable,” Groff said.

Thus, advancing the sustainable use of resources by improving efficiency, decreasing demand, and regenerating resources would be the region’s second challenge as more than half of the world’s population live in Asia.

Groff said another risk the region is facing is the regional cooperation and integration which should become more critical in the next few years.

 “Given the interrelatedness of development challenges, regional cooperation and integration will become even more critical in the years ahead, not only for economic development but for promoting peace and stability,” he said.

“To conclude, Asia and the Pacific is in the midst of a massive social and economic transformation. How it navigates development pathways, and how it identifies the right kind of development-oriented investment, will impact not just the region but the entire globe,” Groff added.