The Asia Development Outlook Report for 2024 offers a comprehensive analysis of the economic landscape across the diverse and dynamic region of Asia. As one of the most rapidly evolving regions globally, Asia’s economic trajectory profoundly impacts global markets and trends. This year’s report delves into key themes such as emerging technologies, sustainable development goals, regional integration, and the ongoing impacts of geopolitical shifts. Through rigorous analysis and insightful projections, the report provides policymakers, businesses, and stakeholders with invaluable insights to navigate the opportunities and challenges shaping Asia’s development journey in the years ahead.
Tags: GS Paper – 2, GS Paper – 3 Government Policies & Interventions- Regional Groupings– Important International Institutions— Growth & Development— Industrial Growth .
For Prelims: Asian Development Bank, India’s Gross Domestic Product, Capital expenditure, Current account deficit, Regional Comprehensive Economic Partnership, Asian Infrastructure Investment Bank, International North-South Transport Corridor, India-Middle East-Europe Corridor, International Solar Alliance.
For Mains: Sectors Driving Asia’s Development, India’s Contribution in Asia’s Development.
Context:
- The Asian Development Bank (ADB) revised India’s GDP growth forecast for fiscal years 2024 and 2025 in its April 2024 Asia Development Outlook Report, attributing the adjustment to multiple factors driving optimism.
The Key Highlights of Asia Development Outlook Report 2024:
Asia’s Growth Outlook:
- About: Despite uncertainties in external factors, Asia is poised to sustain robust growth in the forthcoming years.
- Contributing Factors: The region’s positive trajectory is fueled by several factors, including the conclusion of interest rate hikes across most economies and a consistent uptick in goods exports, notably bolstered by the growing demand for semiconductors.
- GDP Growth Forecast: Projections indicate that Asia’s GDP growth will maintain stability, with a forecasted growth rate of 4.9% for 2024, a trend expected to persist into 2025.
- Resilience: This consistent growth trajectory underscores Asia’s resilience in the face of external challenges, showcasing its capacity to uphold economic momentum.
- Inflation Trends: Anticipated inflation trends suggest moderation in Asia, with a projected rate of 3.2% for 2024, further decreasing to 3.0% in 2025.
- Stability: These trends signify a relatively stable pricing environment, which could bolster consumer confidence and expenditure within the region.
India’s Growth Forecast:
- Growth Projection: India’s role as a significant economic powerhouse in Asia is underscored by its investment-driven growth trajectory.
- Revised Forecast: The Asian Development Bank (ADB) now anticipates India’s GDP growth to reach 7% in FY 2024 and 7.2% in FY 2025, up from the previous estimate of 6.7% for FY 2024.
Drivers of Growth in FY 2024:
- Increased capital expenditure on infrastructure by central and state governments serves as a primary growth catalyst.
- Anticipated rise in private corporate investment, supported by stable interest rates and improved consumer sentiment.
- Notable performance in the service sector, including financial, real estate, and professional services, contributing significantly to economic expansion.
Growth Momentum in FY 2025:
- FY 2025 is poised for escalated momentum, propelled by enhanced goods exports, improved manufacturing efficiency, and heightened agricultural productivity.
- The forecast reflects a positive economic outlook for India, buoyed by robust domestic demand and favourable policy measures.
Risks and Challenges:
- Despite the optimistic forecast, unanticipated global shocks such as disruptions in crude oil markets and weather-related impacts on agriculture pose significant risks.
- A moderate widening of the current account deficit is projected due to increased imports to meet domestic demand.
- However, recent Reserve Bank of India (RBI) data indicates a sequential decrease in the current account deficit, from 1.3% of GDP in Quarter 2 FY24 to 1.2% in Quarter 3 FY24.
The Asian Development Bank (ADB):
- Establishment: Founded in 1966, ADB is a regional development bank committed to fostering a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, with a focus on eradicating extreme poverty in the region.
- Activities: ADB aids its members and partners by providing loans, technical assistance, grants, and equity investments to advance social and economic development.
- Headquarters: ADB’s headquarters are located in Manila, Philippines.
- Membership: Currently comprising 68 members, with 49 from within Asia and the Pacific and 19 from outside the region.
- ADB and India: India holds the status of a founding member of ADB and stands as the bank’s fourth-largest shareholder.
- Support for India: ADB aligns with India’s priorities for robust, climate-resilient, and inclusive growth, in line with ADB’s Strategy 2030 and the country partnership strategy for 2023–2027.
The Sectors Driving Asia’s Growth:
- Economic Powerhouses:
- Asia boasts some of the world’s fastest-growing economies, including China, Japan, and India, ranking among the top 5 globally. This robust economic expansion has spurred the emergence of a burgeoning middle class across the region, fueling substantial demand for goods and services.
- Example: Vietnam anticipates adding 36 million individuals to its middle class by 2030.
- Manufacturing Hubs:
- Asia has long been a dominant force in manufacturing, leveraging skilled labour and efficient infrastructure to establish itself as a cost-competitive hub.
- From China’s stronghold in electronics to Vietnam’s ascent in footwear production, Asian nations play a pivotal role in global supply chains.
- Rising Trade & Investment:
- Active participation in international trade characterises Asian nations, with regional trade agreements like the Regional Comprehensive Economic Partnership (RCEP) fostering significant trade blocs. This amplifies intra-Asian trade and attracts foreign investment to the region.
- Emergence of Financial Centers:
- Asian cities such as Tokyo, Hong Kong, and Singapore have emerged as prominent financial hubs, drawing investments, nurturing entrepreneurial ventures, and facilitating cross-border capital flows.
- The burgeoning influence of Asian financial institutions like the Asian Infrastructure Investment Bank (AIIB) underscores the region’s increasing sway in shaping global economic policies.
India’s Contribution to Asia’s Growth:
- Regional Connectivity:
- India spearheads regional connectivity initiatives in Asia through projects like the International North-South Transport Corridor (INSTC) and the India-Middle East-Europe Corridor, aimed at enhancing transportation networks and fostering economic cooperation across Asia, Africa, and Europe.
- Renewable Energy:
- India champions sustainable development in Asia through initiatives like the International Solar Alliance (ISA), which it co-launched with France.
- The ISA promotes global adoption of solar energy, particularly in sun-rich Asian and African countries, addressing energy security and climate change challenges.
- Capacity Building:
- India contributes to capacity-building efforts in Asia via programs like the Indian Technical and Economic Cooperation (ITEC) program.
- Through ITEC, India provides training, education, and skill development opportunities to professionals and students from Asian nations, nurturing human resource development and cultural exchanges.
- Unifying Asia with UPI:
- India’s Unified Payments Interface (UPI) services are gaining popularity across Asia due to their convenience and efficiency in digital transactions.
- UPI services have already been introduced in Sri Lanka and Mauritius, facilitating seamless financial transactions and fostering economic integration within the region.
UPSC Civil Services Examination, Previous Year Question (PYQ)
Prelims:
Q:1 Consider the following statements: (2020)
- The value of Indo-Sri Lanka trade has consistently increased in the last decade.
- “Textile and textile articles” constitute an important item of trade between India and Bangladesh.
- In the last five years, Nepal has been the largest trading partner of India in South Asia.
Which of the statements given above is/are correct?
- 1 and 2 only
- 2 only
- 3 only
- 1, 2 and 3
Ans: (b)
Q:2 Which one among the following South Asian countries has the highest population density? (2009)
- India
- Nepal
- Pakistan
- Sri Lanka
Ans: (a)
Q:3 The term ‘Regional Comprehensive Economic Partnership’ often appears in the news in the context of the affairs of a group of countries known as (2016)
- G20
- ASEAN
- SCO
- SAARC
Ans: (b)
Mains
Q:1 Evaluate the economic and strategic dimensions of India’s Look East Policy in the context of the post-Cold War international scenario. (2016)
FAQs
Q: What is the Asia Development Outlook Report 2024?
The Asia Development Outlook Report 2024 is an annual publication by the Asian Development Bank (ADB) offering comprehensive economic analysis and forecasts for the Asia-Pacific region. It provides insights into key economic trends, challenges, and opportunities shaping the region’s development trajectory.
Q: What are the key findings of the Asia Development Outlook Report 2024?
The report highlights robust economic growth across much of Asia, driven by factors such as infrastructure investment, technological innovation, and expanding consumer markets. However, it also identifies persistent challenges such as income inequality, climate change, and geopolitical tensions, which require coordinated policy responses for sustainable development.
Q: What are the policy recommendations put forth in the Asia Development Outlook Report 2024?
The report emphasizes the importance of policies aimed at promoting inclusive growth, enhancing regional cooperation, and addressing environmental sustainability. It calls for investments in education and healthcare, efforts to narrow income disparities, and measures to promote green and resilient infrastructure. Additionally, it advocates for policies that foster innovation and digitalization to enhance productivity and competitiveness in the region.
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