China and India can no longer expect double-digit annual growth, but other factors such as technology mean that the Asia’s economic outlook remains strong. Issues surrounding challenges and expectations surrounding Asia’s economic outlook were discussed by a panel of experts in a recent discussion organised by the Lee Kuan Yew School of Public Policy. They were: Dr Adam Posen, President of the Peterson Institute for International Economics; Mr Joerg Wuttke, President of the European Union Chamber of Commerce in China; Ms Ann Lavin, Director of Public Policy and Government Affairs in Asia Pacific at Google; and Dr Montek Singh, Deputy Chairman of India’s Planning Commission.
The panel was moderated by Mr James Crabtree, Senior Visiting Research Fellow at the LKY School, who also drew on his experience at the Financial Times and the UK Prime Minister’s Strategy Unit in the discussion.
The Asian Century Guaranteed?
“We’re lowering expectations,” warned Dr Posen, noting that Asia is currently experiencing “catch-up growth” whereby developing economies generally grow faster than industrialised economies. However, he added “this means expectations are more sustainable” and the world was in favour of
development in East and South Asia.
Even so, Dr Singh explained that global growth prospects continued to be disappointing, and that this was reflected in the International Monetary Fund (IMF) regularly downgrading its economic projections. Nonetheless, the IMF’s April 2016 World Economic Outlook still projects 6.4 per cent growth in 2016 for Emerging and Developing Asia, with 6.5 per cent and 7.5 per cent projected for China and India respectively. These figures actually represent a slight improvement on the January 2016 projections, when China and Emerging and Developing Asia were both expected to grow by 6.3 per cent this year.
Referring to China, Mr Wuttke stated he was expecting a flattening, “L-shaped” economic outlook and that the future would be “bumpy for the next one or two years”. Still, China would survive due to its natural resources, he added, but the country would need to have “painful discussions” about policy reforms to
ensure a stronger medium- and long-term economy.
Not all Doom and Gloom
Mr Crabtree noted that much of the discussion focused on the negative, and asked: Were the panellists being too gloomy on Asia’s prospects? Dr Singh agreed, explaining that people were used to believing that global growth was led by industrialised countries, and would trickle down to the developing world. However, developing countries, including in Asia, have gained the technical and human capacity that have allowed them to be engines of growth.
Ms Lavin declared she was optimistic about Asia’s future, saying that the overall trend would be “great” – even if it would undergo “all sorts of fits and starts, and bad moments”. She noted none of world’s 20 largest Internet companies were European, and that three of the top six were Chinese, including Alibaba and Baidu. She said technology was a driver of growth, and that Asians led the world in smartphone adoption, and were more comfortable than Westerners in using this technology for shopping and business.
Mr Wuttke said China was not in danger of crashing – though, it was in danger of missing a major opportunity. The same could be said of the whole region, he added: The Asian Century is there to be seized, if Asia will seize it.
Mr James Crabtree is a Senior Visiting Research Fellow at the Lee Kuan Yew School of Public Policy. He previously held roles in the UK Prime Minister’s Strategy Unit as a policy advisor, focusing on issues relating to “open data” and new technologies, and the Financial Times, the world’s leading business newspaper. At the FT, he first served as Comment Editor, before moving to India to become the paper’s Mumbai bureau chief.
Dr Adam S. Posen is President of the Peterson Institute for International Economics, a leading independent nonpartisan think tank on economics and globalization located in Washington DC. He is an expert on macroeconomic policy, central banking and financial crises. Between 2009 and 2012, Dr Posen was appointed by the UK Chancellor of the Exchequer as an external voting member of the Bank of England’s rate-setting Monetary Policy Committee. He also consulted for the UK Cabinet Office on the successful London G-20 Summit of 2009. In April 2012, an article in the Atlantic magazine named Dr Posen to its international team of “superstar central bankers” and in December 2012, he was profiled in the New York Times Magazine article, “God Save the British Economy”. The author or editor of seven books, he received his A. B. and PhD from Harvard University.
Mr Joerg Wuttke is Vice President and Chief Representative of BASF China, and President of the European Union Chamber of Commerce in China. Since joining BASF in 1997, he is responsible for guiding the company’s investment strategies for China and negotiation of large projects and government relations. Mr Wuttke has held and currently chairs various business federations and advisory committees. He is Chairman of the German Chamber of Commerce in China; Chairman of the Business and Industry Advisory Committee to the OECD, China Task Force; member of the Advisory Board of the Mercator Institute for China Studies (MERICS) and Vice Chairman of the CPCIF International Cooperation Committee. He holds a BA in Business Administration and Economics from Mannheim.
Ms Ann Lavin is Director, Public Policy and Government Affairs in Asia Pacific at Google. Her responsibilities include Greater China, Southeast Asia and Asia’s aspiring economies. Working to create the conditions for economic growth and opportunity through the Internet she focuses on a range of issues including economic empowerment, content regulation, geopolitics, privacy, and general technology policy. Previously, Ms Lavin was a Senior Advisor with McLarty Associates, a US-based strategic advisory firm, and Vice President of the US-ASEAN Business Council, the principal US business organization in Southeast Asia. Earlier in her career, Ms Lavin worked in the US government in a variety of roles including a senior manager at the US Department of Energy and the President’s Commission on White House Fellowships.
Dr Montek Singh Ahluwalia is Deputy Chairman of the Planning Commission by the ruling UPA Government in India. Dr Montek Singh has been a driving force India’s economic liberalisation program for the last 16 years. He was previously a director at the International Monetary Fund, and was the youngest member of the World Bank to hold a distinguished position of Division Chief. His remarkable and meritorious work in the field of economics won him the Padma Vibhushan, India’s second highest civilian award, in 2011.
This article is written as an opinion piece for the What Future for Asia in the World Economy public panel. which took place at the Lee Kuan Yew School of Public Policy on 11 May 2016. The public panel follows the inaugural Roundtable on Asia in the World Economy, hosted by the Lee Kuan Yew School of Public Policy and the Peterson Institute of International Economics. This high-level forum brings together forty academic experts, policy-makers and business leaders from Asia and the West.