HAMAD ALSEBEIH WRITES — The Asian continent has long had some of the world’s fastest growing regional economies despite severe socio-economic problems and infrastructural barriers. A large part of this economic progress has been linked to simultaneous developments in productivity, exports, and capital expenditure. As Europe and America continue to struggle with COVID-19, Asian economies have shown signs of recovery riding on the back of a sharp upturn in exports. With strong global trade flows, Asian countries have been less dependent on leverage and stimulus mechanisms. Thanks in part to governmental interventions in the form of budgetary policies and tariff controls, inflationary pressures have been largely kept at bay.
And yet, financial inclusion continues to be a problem. As the World Economic Forum reports, greater access to capital and improvements in the availability and delivery of financial services will be critical towards building an even better path to regional recovery in the coming years. According to recent estimates, 6 in 10 Southeast Asians continue to remain unbanked today. The problem is further aggravated by the significant presence of an informal economy. Most workers who belong to informal sectors face problems with financial inclusion and banking services.
Overall, though, the region has shown signs of improvement, with a growing number of fin-tech players and heavy mobile penetration. In addition, the COVID-19 pandemic has encouraged consumers who previously refrained from online service deliveries to resort to digital means.
Experts believe that effective policies will be a turning point in preventing the region from falling into the ‘middle-income’ trap. Besides green finance and increased digitalization, regional coordination will be of paramount importance towards bridging existing gaps. There is ample evidence of Asian economies engaging in digital re-skilling programs and investing in sustainable sectors and industries to boost the economy.
All said, though, there must be greater emphasis on the diversity of tensions that looms over the global economy. Green bond markets and digital infrastructures have grown tremendously over the past few years, with China being the leader. Other economies must follow suit in terms of improving readiness for digitalization and enabling infrastructural developments.
Transitioning away from fossil fuels and engaging more deeply with renewable sources will also further bolster the region’s economic growth. Indonesia, for example, is the largest thermal coal exporter in the world while China continues to dominate the global coal usage numbers. Despite economic progress, most Asian economies, including the likes of India, Malaysia, Singapore and Indonesia continue to remain cash-strapped due to extensive infrastructural investments. A planned approach that builds on collective coordination and prioritizes regional interests will be important in paving the way to sustainable economic development.