The underlying long-term growth dynamics in Emerging Asia are good.   The demographics are favourable, with the proportion of the working age population continuing to rise in most Asian economies.   The emergence of a sizeable middle class and ongoing urbanisation will underpin a continued expansion in domestic consumption and investment. These underlying factors alone should support healthy growth in Emerging Asia, barring serious policy mis-steps or crises. But if Emerging Asia also undertakes the necessary structural reforms and achieves greater regional integration, growth could be even higher. For example, successful reforms and further integration could boost ASEAN’s growth from close to 5% currently to 6%. Structural reforms will help unlock the productivity gains that Asia needs for its next phase of growth. This will be increasingly important as countries move up the economic value chain. The structural reforms each economy needs are different. But what is encouraging is that these countries have moved economic restructuring to the top of their agenda.   In China, the goal is to orientate the economy towards domestic consumption and strengthen the role of the market in allocating resources. The Third Plenum reforms offer a comprehensive blueprint to do this.   In India, the critical task is to improve the business environment and build the infrastructure necessary for a strong manufacturing sector that will provide jobs and  BIS central bankers’ speeches  1  raise incomes. The new government has signalled clearly that India is open for business.
The impact of the Fed’s tightening cycle in the 1990s on emerging markets was not as widespread as the 1980s episode had been, and countries like Chile and Colombia were able to  st  1 Remarks at the 2017 IIF Latin America Economic Forum, Asunción, Paraguay on Saturday April 1 , 2017. I acknowledge the support of Diego Gianelli and Mauricio Hitschfeld in the preparation of this speech. These remarks do not imply endorsement by the Central Bank of Chile or any of its Board members. 2 There is a third episode between June 1999 and June 2000. This process of 150 bp hikes can be understood as the final adjustment along the 1994 episode. 3 See, for example, the discussion in García‐Herrero, A., 1997, Banking Crisis in Latin America in the 1990s: Lessons from Argentina, Paraguay and Venezuela, IMF Working Paper 97/140. See also Sachs, J., A. Tornell and A. Velasco, 1996, Financial Crisis in Emerging Markets: The Lessons from 1995, NBER Working Paper 5576. 1                weather this period relatively well and to keep high growth rates.4 But there is ample evidence that, in a context of several macroeconomic imbalances in several emerging economies, the 1994 episode triggered a series of difficulties and crisis that configured the macroeconomic map in the developing world in the second half of the decade. In contrast, the monetary policy normalization process starting in 2004, did not have a negative effect on emerging economies.