Asia must fight complacency and transform its economic and social models if it is to keep driving global growth in years to come as Europe and the United States slow, experts say.
The region, which includes more than half the world’s population and two of its three largest economies in China and Japan, has long been touted as the economic hub of the future.
But while the global economy rebalances from West to East, Asia has serious challenges ahead, analysts warned at the World Economic Forum’s summer meeting in Tianjin.
“First and foremost, there is a tendency for Asia to become complacent,” said Indian lawmaker N K Singh at last week’s gathering of the global political and business elite in the sprawling port city southeast of Beijing.
“Are we too prematurely declaring a victory, that Asia as the 21st century power has arrived on the scene?”
Asia faces strong outside pressures due to the impact of Europe’s debt crisis and the still weak US, which is weighed down by stubbornly high unemployment.
The continent’s economies grew rapidly in the decades after the Second World War by taking advantage of cheap labour and favourable exchange rates to export manufactured goods to developed economies.
But that model suffered a serious blow in the wake of the 2008-2009 global financial crisis when US consumers in particular pulled back and turned instead to paying down years of debt amid growing job insecurity.
Asia grew 5.9 per cent last year, far outpacing Europe and the US, and should expand a slightly weaker 5.5 per cent in 2012, still well ahead of average world growth of just over three per cent, said International Monetary Fund official Zhu Min.
But over the past two years Asia’s performance has been substantially below 2010′s 8.5 per cent expansion, he pointed out.
“Asia has to be the global growth engine for decades,” Zhu said in a discussion on the region’s future, adding that to do so its economies need domestic demand to play a greater role, especially in China.