Challenges for Asia Economic Growth Sustainability

Over the past few decades, Asian economies have experienced tremendous growth, and the trend is expected to continue in this decade. Despite the continual growth, Asia economies still face several challenges that may affect the sustainability of the growth in both long and short terms. The global and regional prospects for the future of most of the economies are uncertain, especially with reduced exports as more third world countries create policies to promote industrialisation. The region also faces the challenges of integration, which is crucial in sustaining their growth through regional trade and utilisation of local markets. These challenges put Asia’s sustained economic growth at risk if there are no proper policies in both national and regional levels.

Export-Led Growth Model

Most Asian leading economies such as China, Korea and Japan rely on export. Such an economic model has a sustainability risk because these countries’ domestic markets can hardly absorb the deficit created if they experience a reduction in export demand. For example, China’s economy is more likely to be affected by global economic fluctuations, unlike indian economy, which is driven by domestic demand. Adjusting the policy is also a challenge because these economies will experience a short-term growth that they may not bear.

Asia economies still face several challenges that may affect the sustainability of the growth in both long and short terms. The global and regional prospects for the future of most of the economies are uncertain, especially with reduced exports as more third world countries create policies to promote industrialisation. The region also faces the challenges of integration, which is crucial in sustaining their growth through regional trade and utilisation of local markets. These challenges put Asia’s sustained economic growth at risk if there are no proper policies in both national and regional levels.

Integration Challenges

Integration is an essential factor in Asia’s economic growth, but the level of integration cannot support self-contained economic region. Most of the trade agreements in Asia are shallow and may require more time to bring a significant economic impact. Having a broader Pan-Asian economic co-operation is a challenge due to the huge size of the continent combined with the varying political ideologies and cultures. Most of the integrations are within smaller regions, but they also face slow progress due to political differences. Tariff increases and trade tensions in the region can adversely impact economic growth.

Demographic

In contrary, the growing economies like the Thailand economy and Vietnam economy, the developed Asian economies such as China, Japan and Singapore economy have ageing societies partly due to policies such as the one-child rule in China. An ageing population is a risk to economic growth, given that these Asian countries are not willing to adopt more open immigration policies that will help them replace the ageing working population once they retire. An ageing population is also a challenge in areas such as health care, pension systems and labour population.

Japan and Singapore are already reacting with countermeasures. Both governments implemented new retirement income or care programmes, and are already seeing positive results.

The trend is, however, different in other economies such as in India and the Indonesia economy, where the population is rapidly increasing with a high percentage of young demographic profiles. Such a demographic composition is economically beneficial, but only if these young people are employed and productive.

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