Developing Asia is forecast to expand by 6.0% in 2018, and by 5.9% in 2019. Excluding Asia's high-income newly industrialized economies, growth should reach 6.5% in 2018 and 6.4% in 2019.
With oil prices edging up and robust consumer demand continuing, inflation is poised to pick up after dipping slightly last year. Consumer prices are projected to rise by 2.9% in both 2018 and 2019, or 0.6 percentage points more than in 2017.
Though prospects are firm, risks are clearly to the downside. Protectionist measures and retaliation against them could undermine the recent pickup in trade growth. In response to fiscal stimulus, the United States Federal Reserve may need to raise interest rates faster than currently expected, which could diminish capital flows to developing Asia.
Turning strength into opportunity:
Strong tailwinds but tricky crosscurrents
The region picked up steam throughout last year to average 6.1% growth in gross domestic product (GDP). Excluding the high-income newly industrialized economies, growth was 6.6%.
Private debt and economic growth
Ratios of household and nonfinancial corporate debt to GDP have continued to rise in emerging markets, including those in Asia.
Outlook by subregion
Most of developing Asia will pause after a pickup in 2017
As only 14 of 45 individual economies are forecast to see growth accelerate in 2018, aggregate growth rates in most subregions are projected to be unchanged or lower this year. South Asia is the exception, as a rebound in India will lift growth above 7%, making it the fastest growing subregion in developing Asia. Across the region, domestic demand will remain as the key sustainer of growth. Central Asia and the Pacific will bounce back in 2019.
How technology affects jobs
New technologies drive higher productivity, the foundation for better-paid jobs and economic growth. While new technologies displace jobs, they also unleash countervailing forces that generate more jobs. As some workers may be left behind, governments in developing Asia should respond to this challenge by ensuring that workers are protected from the downside of new technologies and prepared to harness the new opportunities they provide. This will require coordinated action on skills development, labor regulation, social protection, and income redistribution.
Rising concern over technology displacing jobs
Emerging technologies such as robotics, three-dimensional printing, artificial intelligence, and the internet of things will help drive future prosperity. Yet they also pose challenges for workers.
Reasons for optimism on job prospects
While task automation may displace some types of jobs, in other cases it restructures the job such that machines handle only the routine tasks, freeing up workers to focus on more complex tasks. Improved productivity and lower prices also often spur higher demand. Increased demand may even expand the number of jobs in factories that automate part of their production process.
Some worker concerns remain
New jobs will appear, but they may require skills that such workers do not possess. Further, as firms and industries adjust to new ways of producing and distributing goods and services, the resulting disruptions along existing supply chains may cause unemployment.
The role of government in harnessing technology for workers
As some workers may be left behind, governments in developing Asia should respond to this challenge by ensuring that workers are protected from the downside of new technologies and prepared to harness the new opportunities they provide.