A warm welcome to all and thank you for joining us at the launch of the Economic and Social Survey of Asia and the Pacific 2022.
When the pandemic struck just over two years ago, it was not clear how devastating an impact it would have on people and economies. And today, while we are still far from the end of the pandemic, we have to deal with the impact of worsening geopolitical situation.
The Economic and Social Survey of Asia and the Pacific 2022 sheds more light on what has transpired over the last two years, how far we have come, and how best to “build forward fairer.”
Although our economies have rebounded from the worst, this recovery in economic growth is more unequal than before. The benefits of the recovery have not reached where it is needed the most.
Since the start of the pandemic, 85 million people have been pushed into extreme poverty, while millions more suffered disproportionately from its effects.
As a result, economists and policymakers are focusing again on the ever-existing threat to economic growth, prosperity and the 2030 Agenda for Sustainable Development.
In many ways, what we are facing now is the pandemic of economic inequalities.
It is not enough to merely recover from this pandemic, but what we would like to see is a better, fairer and more inclusive future for all. This requires us to reflect back on what we have before and on how to set it in a better direction.
Just to cite a few examples: Investments in people through spending on education, healthcare and social protection have been far too low in our developing Asia-Pacific region.
Central banks have not promoted financial inclusion and financial equality strongly enough. People-centred policymaking has not always been the priority. Even today, 820 million workers in our Region remain in the informal economy as the economic growth model did not prioritize their inclusion and long-term well-being.
As the Survey has argued in recent years, there is potential for a massive change towards a fair and inclusive future. This year’s Survey provides a direction for macroeconomic policies to do so.
Two years of the pandemic have squeezed the fiscal space, pushing governments towards consolidations. Debt challenges multiplied. Fiscal revenues are not growing fast enough to match the mounting fiscal expenditure needs.
Therefore, this year’s Survey reminds us that we need to “spend smart.”
We need to preserve expenditures in three areas to ensure an inclusive future:
- investments in education // will help our children that have suffered massively due to school closures;
- investments in universal health care for all // will shield people from falling into poverty due to out-of-pocket health care expenditures; and
- investments in social protection floors // will support and shield all from unexpected risks and enhance their quality of life, especially amongst those with the lowest incomes and no protection at all.
At the same time, these measures need to be complemented with a “tax fair” policy. Tax revenues in Asia and the Pacific are among the lowest in the world.
However, tapping into these resources will require a strong push towards tax compliance, cutting tax evasion and avoidance, and formalization of the economy.
Moreover, these fiscal policy recommendations have benefited greatly from accelerated digitalization especially since the past two years.
It has accelerated the needed change in fiscal policy management, on the expenditure and the revenue side, ensuring efficiency, transparency and delivery of data for evidence-driven policymaking.
However, tackling inequality should not be the job of the governments alone, as is often assumed. Central banks should and can play a bigger role.
Central banks can foster equitable societies in many ways.
When adjusting the policy rate, they can analyze how this will affect different groups of people.
On official reserve management, instead of putting all reserves in short-term financial instruments, part of them can be invested in social bonds.
Central bank digital currency also presents the potential to improve financial inclusion.
Finally, the Survey reminds us that inequality is closely linked to structural changes in the economy.
Inclusive development relies on the rapid creation of more productive jobs, equal access to economic opportunities and the empowerment of workers in the market distribution of income.
On the verge of the fourth industrial revolution, where new technologies will reshape the entire economy at an unprecedented depth and pace, it is time to ensure that inclusiveness is interwoven into the fabric of structural changes.
This means promoting labour-friendly transformation, empowering workers, investing in reskilling, life-long learning and job-market intermediation.
The pandemic has certainly given us an opportunity to rethink our future.
Let us make the most out of it. Thank you very much!