According to the Economic and Social Survey of Asia and the Pacific – ESCAP’s long-running flagship publication – developing economies are on track to record an overall growth rate of 5.8 percent in 2017, compared with 5.4 percent the previous year.
For 2018 and 2019, these economies are projected to grow by 5.5 percent, with concern over debt levels in China offset by a recovery in India and steady performance in the rest of the region.
Strengthening resilience to mitigate future risks
Bolstering the fundamentals will be important as the medium-term outlook sees growth trending downward in several countries owing to aging populations, slower capital accumulation and modest productivity gains.
At the same time, “rapid technological advancements, while promising immense opportunities are also posing considerable challenges in terms of job polarization and income and wealth inequalities,” said Ms. Akhtar.
The report also made the case for the use of so-called macroprudential measures (measures which look at the financial system as a whole) to mitigate risks and keep economies stable.
“Lifting productivity will require a ‘whole-of-Government approach’ for fostering science, technology and innovation and investments in relevant skills and infrastructure,” urged ESCAP, highlighting the need to strengthen social protection and efficient use of resources.
Tax reform and strengthening tax collection could also add as much as 8 percent to the gross domestic product (GDP) of countries such as Myanmar or Tajikistan; and about 3 to 4 percent in larger countries, like China, India or Indonesia, according to ESCAP.
Domestic resource mobilization presents a challenge for developing countries, who need to raise tax revenue of at least 15 percent of their gross domestic product (GDP) to be able to provide basic services, such as infrastructure, health care and public safety.
Presently, in almost 30 of the 75 poorest countries, tax revenues are below this threshold.