## Asia’s Advancing Role in the Global Economy

_IMF News, March 12, 2016_

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## Bibliographic details
- Authors: Christine Lagarde
- Published: March 12, 2016

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### Overview
- Speech by Christine Lagarde, Managing Director, International Monetary Fund, New Delhi, India, March 12, 2016. As Prepared For Delivery.
- Asia is described as the world’s most dynamic region, accounting for 40 percent of the global economy.
- Over the next four years—even with slightly declining momentum—it stands to deliver nearly two-thirds of global growth.

### Building on Recent Gains
- Long-run performance:
  - For the past 25 years—the Asian crisis notwithstanding—the region’s economy has grown by around 6 percent a year.
  - In the aftermath of the recent global financial crisis, Asia was a rare bright spot.
- Social and human development:
  - Over the past 35 years, this region has been the world’s leader in reducing poverty.
  - Education and health outcomes have improved significantly; living standards have been raised.
- Innovation and integration:
  - Asia has become a byword for innovation across technology sectors (examples cited: cars, smartphones, televisions, biotechnology, commercial satellites, renewable energy).
  - Increased interconnectedness means Asia affects and is affected by global economic developments more than ever before.

### Global Economic Challenges and Asia’s Response
- Global challenges listed:
  - Volatile markets and capital flows;
  - Economic transitions and financial tightening in many countries;
  - The large drop in commodity prices, including oil;
  - Escalated geopolitical tensions.
- Broad policy responses:
  - Supportive monetary policy—consistent with price and external stability objectives;
  - Growth-friendly fiscal measures;
  - Macro-prudential measures to safeguard financial stability.
- Country-specific structural reform priorities (examples):
  - China: improving the allocation of credit to help rebalance the economy away from debt-led investment.
  - Japan: tackling dual labor markets, liberalizing product markets, and reforming corporate governance.
  - India: enhancing the efficiency of product markets, encouraging private investment, and improving infrastructure.
  - Across many countries: strengthening the business environment and developing bond markets.
- Purpose: Structural reforms are key to boosting competitiveness, growth, and jobs and to securing medium- and long-term prospects.

### Unlocking Asia’s Potential
- Inequality and inclusion:
  - Across the region as a whole, income inequality has worsened since 1990.
  - A new IMF staff paper finds that income inequality has since increased in 15 of 22 Asian economies.
  - Asia remains home to two-thirds of the world’s poor, many of whom live in India.
  - In most of the region, women and youth are still greatly underrepresented in the labor market.
  - Regional population: Asia’s 4.4 billion people.
- Opportunities and policy levers:
  - Broadening access to services like health and finance:
    - India is targeting universal access to banking services by 2018.
    - Through the Pradhan Mantri Jan-Dhan Yojana scheme, over 210 million previously unbanked people have opened a bank account since August 2014, with social transfers paid directly.
  - Leveraging fiscal policy:
    - Target social spending on the neediest; avoid costly across-the-board subsidies; make taxes more progressive.
    - India’s Aadhaar system: almost 1 billion people have Aadhaar numbers, with potential to deliver payments and other services—including for women.
    - Example: Philippines pioneered conditional cash transfer programs.
  - Empowering women:
    - Enhance girls’ access to high quality education; dismantle legal and logistical barriers to economic participation; make it more practical for women to combine a job and a family.
    - Example: Beti-Bachao, Beti-Padhao initiative to improve women’s welfare services.
  - Labor market formalization:
    - Tackling duality and informality to bring more young people into formal jobs—important for countries with aging populations.
  - Infrastructure and services:
    - More than 800 million people in Asia lack access to water, sanitation and electricity—inclusive growth requires more and more efficient infrastructure investment.
  - Trade integration:
    - Even-greater trade integration can support sustained growth, especially for India and other South Asian countries.
    - Multilateral trade liberalization can be globally welfare-enhancing; in its absence, comprehensive regional trade agreements can lower tariff and non-tariff barriers and incorporate new areas like services.
  - Climate change:
    - Last December, 186 countries submitted mitigation pledges in the context of the historic Paris Agreement.
    - Implementation requires actions such as carbon pricing and energy subsidy reforms; Asia has a massive stake in this effort.

### Asia and the IMF
- Institutional and governance developments:
  - Quota and governance reforms came into effect earlier this year that enhance the representation of emerging Asian economies within our 188 member countries.
  - One consequence is that India now joins China and Japan among the Fund’s top ten shareholders.
  - The renminbi was included as the second Asian currency in the IMF’s SDR currency basket—joining the yen.
- Engagement and capacity development:
  - In 2018, Indonesia will host the IMF Annual Meetings.
  - The Fund is opening a new Regional Training and Technical Assistance Center for South Asia in New Delhi—its first fully integrated center and a model for future capacity development work.
  - Partner countries in the center: India, Bangladesh, Bhutan, Maldives, Nepal, and Sri Lanka; external partners include Australia and Republic of Korea.
  - The Government of India offered to host the center and made a substantial financial commitment.

### Conclusion: Asia’s Global Leadership
- Asia’s dynamism presents a historic opportunity to invest now in the future—and to advance Asia.
- Doing so will put Asia on the path to sustained growth and strengthen its role in the global economy—as a key contributor and as a leader for the 21st Century.

*Source: "Asia’s Advancing Role in the Global Economy," By Christine Lagarde, Managing Director, International Monetary Fund, March 12, 2016.*

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## References

- [India and the IMF](http://www.imf.org/external/country/IND/index.htm)
- [Speeches](https://www.imf.org/en/news/searchnews)
- [Christine Lagarde](https://www.imf.org/external/np/omd/bios/cl.htm)
- [Conference: Advancing Asia](https://www.imf.org/external/np/seminars/eng/2016/advancingasia/)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Asia and Pacific: Stabilizing and Outperforming Other Regions](https://www.imf.org/external/pubs/ft/reo/2015/apd/eng/areo0415.htm)
- [IMF Working Paper: Asia’s Quest for Inclusive Growth Revisited
3IMF Working Paper: Sharing the Growth Dividend: Analysis of Inequality in Asia
4IMF Working Paper: Asia’s Quest for Inclusive Growth Revisited
5 “Prime Minister’s Community Wealth-Building Scheme”
6 “Save girl child and educate her”](https://www.imf.org/external/pubs/cat/longres.aspx?sk=42742.0)
- [Sharing the Growth Dividend: Analysis of Inequality in Asia
4IMF Working Paper: Asia’s Quest for Inclusive Growth Revisited
5 “Prime Minister’s Community Wealth-Building Scheme”
6 “Save girl child and educate her”](https://www.imf.org/external/pubs/cat/longres.aspx?sk=43767.0)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/sp031216_