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.
Most important will be to ensure the continued economic flexibility of the region to adjust to the rapidly changing global and regional conditions, the strengthening of the connectivity among the emerging economies in general and within the Asian region, and to boost further the resilience of the region to withstand any destabilising developments. The ASEAN economies have a distinct advantage. In terms of their economic flexibility, their size and stage of development provides the prospects of having greater agility to adjust to the rapidly changing conditions. In terms of the connectivity, the ASEAN region is a highly cohesive region. Historically, it goes a long way back to the 1950s. Cooperation and collaboration are evident in most areas of economic activity and in the financial sector, in both the public and private sectors. Policy-makers participate in several regional agreements and arrangements. The large economies have the opportunity to leverage on the potential synergies from a greater interface with the ASEAN grouping. To realise the Asian potential, continuing the transformative momentum and enhancing the cohesiveness of the region would not be complete without ensuring that the benefits of development is widely shared. Experience has shown, even in the advanced economies, that when inequality is high and significant, instability follows. Greater inclusiveness within economies and across the region is important to ensure the sustainability of our growth and development. An important part of this transformative momentum and greater inclusion will be the transformation involving education, health care and the social security system.