It has been projected that every year, 44 million Asians are expected be added to the urban population. The opportunities generated by these trends are being further enhanced by greater regional economic and financial integration. The intensification in regional integration will not only contribute towards accelerating Asia’s growth momentum, but also further strengthen the resilience and stability of the region. The increased intra-regional trade and investment linkages within Asia over this recent decade have strengthened Asia’s economic resilience to external shocks. Indeed, the changing patterns of trade have allowed Asia to better withstand and emerge with an earlier recovery from this recent global financial crisis. It has also enabled Asia to be less susceptible to the ongoing deleveraging in the advanced economies. The more recent efforts have focused on strengthening regional financial integration - not only to sustain regional financial stability, but also to promote more efficient intermediation of funds in Asia to support the region’s growth prospects. It will allow for the effective rechannelling of Asia’s sizeable surplus funds towards productive investments in the region. Going forward, the intensification of regional integration will mutually reinforce the strengthening of domestic demand in Asia, thereby enhancing the region’s economic growth prospects. While regional economic and financial integration will intensify going forward, driven by the opportunities it presents and the conscious policies for a more cohesive region, Asia will continue to be integrated with the global economy and the international financial system. The external environment for Asia has, however, changed significantly.
Asia’s growth prospect is very much underpinned by the transformative momentum that has, for a number of decades, brought emerging Asia to its current growth trajectory. The economic flexibility of emerging Asia has enabled most of the economies in the region to adjust to the changing conditions and to shift resources to new areas of comparative advantage. Emerging Asia has demonstrated that it has not been weighed down by structural rigidities and impediments. Capital and labour mobility has been strengthened by the economic and financial reforms that have resulted in the shift towards greater market orientation and liberalisation. Changing economic structures and transformation within specific sectors, including the participation in cross border production chains, have been gaining significance. Emerging Asia has also been able to leverage on technology to push beyond prevailing frontiers. Firms in emerging Asia are also increasingly innovating and allocating resources to research and development, and becoming leading players in their various respective industries. An equally important economic shift that is taking place in Asia is the rebalancing of the economies from being export-dependent to domestic demand becoming an important source of growth. Rising incomes, stable labour market conditions and resilient financial systems have supported private consumption and investment activity. Asia is, therefore, transitioning from being just global producers to being global consumers. Asia also has the policy space to support and strengthen domestic demand. Asia is becoming a huge cumulative market in the global economy. Reinforcing the economic flexibility of Asia is the diversity of the region.