Asian Development Outlook (ADO) 2018

368 Pages·2017·4.89 MB·English

by  Asian Development Bank

Asian Development Outlook 2018
How Technology Affects Jobs
The annual Asian Development Outlook analyzes economic performance in the past year and offers forecasts
for the next 2 years for the 45 economies in Asia and the Pacific that make up developing Asia.
Growth prospects in the region are upbeat, buoyed by favorable demand at home and abroad. A strong
performance in 2017 reflected a surge in exports, which will likely abate this year and next, and rapidly
expanding domestic demand. While the outlook is for steady growth, risks to it are decidedly on the
downside: Trade friction could weaken recently deepened trade links, tightening US monetary policy could
diminish investment in developing Asia, and rising domestic private debt may hamper growth.
New technologies drive higher productivity, the foundation for economic growth, better-paid jobs, and
poverty reduction. The latest technologies in robotics and artificial intelligence may threaten some jobs,
however, and leave less-skilled workers behind. To maximize gains in productivity while safeguarding social
welfare, governments in developing Asia should protect workers but not preserve particular jobs. Meanwhile,
they should facilitate the countervailing forces in new technologies that generate new jobs. Dealing with the
downsides of new technology requires synchronized effort on skills development, labor regulation, social
protection, and income redistribution.
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it remains home to a large share of the world’s poor. ADB is committed to reducing poverty through inclusive obsEN
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HOW TECHNOLOGY AFFECTS JOBS
APRIL 2018
ISBN 978-92-9261-120-0
AsiAn Development BAnk
6 ADB Avenue, Mandaluyong City
1550 Metro Manila, Philippines ASIAN DEVELOPMENT BANK
www.adb.org
ASIAN DEVELOPMENT
OUTLOOK 2018
HOW TECHNOLOGY AFFECTS JOBS
APRIL 2018
ASIAN DEVELOPMENT BANK
Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO)
© 2018 Asian Development Bank
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Tel [phone]; Fax [phone]
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Some rights reserved. Published in 2018.
ISBN 978-92-9261-120-0 (print), 978-92-9261-121-7 (electronic)
ISSN 0117-0481 (print), 1996-725X (electronic)
Publication Stock No. FLS189310-3
http://dx.doi.org/10.22617/FLS189310-3
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of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent.
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Notes:
In this publication, “$” refers to US dollars.
ADB recognizes “China” as the People’s Republic of China and “Vietnam” as Viet Nam.
Corrigenda to ADB publications may be found at http://www.adb.org/publications/corrigenda.
Cover artwork by Ana Verayo/2018.
Contents
Foreword           v
Acknowledgments          vi
Definitions           vii
Abbreviations        viii
ADO 2018—Highlights          ix
Part 1 Turning strength into opportunity          3
Strong tailwinds but tricky crosscurrents         4
Private debt and economic growth           26
Annex: Sustaining growth momentum           35
Part 2 How technology affects jobs           49
Rising concern over technology displacing jobs          51
Reasons for optimism on job prospects          66
Some worker concerns remain          89
The role of government in harnessing technology for workers          100
Part 3 Economic trends and prospects
in developing Asia           123
Central Asia           125
Armenia           127
Azerbaijan           132
Georgia           136
Kazakhstan           141
Kyrgyz Republic           147
Tajikistan           151
Turkmenistan           156
Uzbekistan           161
East Asia           167
Hong Kong, China           169
Mongolia           174
People’s Republic of China           179
Republic of Korea           188
Taipei,China           194
South Asia           199
Afghanistan           201
Bangladesh           205
Bhutan           212
India           217
Maldives           226
Nepal           230
Pakistan           234
Sri Lanka           239
Southeast Asia           245
Brunei Darussalam           247
Cambodia           250
Indonesia           253
Lao People’s Democratic Republic          258
Malaysia           261
Myanmar          265
Philippines       268
Singapore          273
Thailand           277
Viet Nam          282
The Pacific         287
Fiji           289
Papua New Guinea         292
Solomon Islands           298
Timor-Leste           301
Vanuatu           306
North Pacific economies           309
South Pacific economies           314
Small island economies           319
Statistical appendix           323
Foreword
The economic growth outlook for developing Asia remains vibrant.
Asian Development Outlook 2018 foresees continued momentum after growth
accelerated to 6.1% in 2017. The region is expected to expand by 6.0% in
2018 and 5.9% in 2019. Excluding Asia’s high-income newly industrialized
economies, the prospects for growth are even higher, at 6.5% in 2018 and
6.4% in 2019. Traction for economic expansion will come from strong
external demand, which is supported by a further pickup in growth this year
in the major industrial economies, and robust domestic demand. Growth in
the People’s Republic of China is seen to continue its gradual moderation,
to 6.6% this year and 6.4% next, as the authorities take actions to address
financial risks, while India recovers from a temporary growth setback
in 2017, rebounding to 7.3% in 2018 and 7.6% in 2019.
Certain risks to this outlook require monitoring. The upswing in trade
could be threatened by rising trade tensions. Although the measures
implemented by the United States as of the end of March this year are
unlikely to have a significant impact, the move away from trade openness
is worrying. Further measures and countermeasures could dent business
and consumer confidence. Meanwhile, capital flows to the region could
diminish if the US Federal Reserve raises interest rates faster than expected
to keep fiscal stimulus there from igniting inflation. Within the region,
the buildup of private debt in some economies in the past few years needs
close monitoring. Fortunately, most Asian economies are well positioned to
meet these challenges.
This year’s publication draws attention to opportunities and concerns
presented by new technologies in the workplace. The application of new
technologies will boost productivity, but at the same time it will displace
certain types of jobs. Evidence shows, however, that rising demand and
higher output will create jobs, outweighing job displacement, especially
with the addition of new occupations and industries that will arise to
meet the new needs of producers and consumers. This transition will
require a skilled workforce and could put the less-skilled at a disadvantage.
The challenge for governments is to ensure that workers are equipped with
foundational skills to enable lifelong learning and have the specialized skills
required for working with new technologies. Governments must act to
enhance and adapt skills development, labor regulation, social protection,
and income redistribution. Finally, they must ensure that new technologies
develop in ways that benefit people and protect their rights.
TAKEHIKO NAKAO
President
Asian Development Bank
Acknowledgments
Asian Development Outlook 2018 was prepared by staff of the Asian Development
Bank (ADB) in the Central and West Asia Department, East Asia Department, Pacific
Department, South Asia Department, Southeast Asia Department, and Economic
Research and Regional Cooperation Department, as well as in ADB resident missions.
Representatives of these departments constituted the Regional Economic Outlook
Task Force, which met regularly to coordinate and develop consistent forecasts for
the region.
The authors who contributed the sections are bylined in each chapter.
The subregional coordinators were Kenji Takamiya and Fatima Catacutan for
Central Asia, Akiko Terada-Hagiwara for East Asia, Masato Nakane for South Asia,
Kwang Jo Jeong and Dulce Zara for Southeast Asia, and Rommel Rabanal and
Cara Tinio for the Pacific.
A team of economists in the Economic Research and Regional Cooperation
Department, led by Joseph E. Zveglich, Jr., director of the Macroeconomics Research
Division, coordinated the production of the publication, assisted by Edith Laviña.
Technical and research support was provided by Shiela Camingue-Romance, Cindy
Castillejos-Petalcorin, Marthe Hinojales, Nedelyn Magtibay-Ramos, Pilipinas
Quising, Aleli Rosario, Dennis Sorino, Lea Sumulong, Priscille Villanueva, and
Mai Lin Villaruel. Additional research support was provided by Emmanuel Alano,
Raymond Gaspar, and Michael Timbang. The economic editorial advisors Robert
Boumphrey, Joshua Greene, Srinivasa Madhur, Richard Niebuhr, and Reza Vaez-
Zadeh made substantive contributions to the country chapters and regional outlook.
A team of economists preparing the theme chapter was led by Rana Hasan,
director of the Development Economics and Indicators Division in the Economic
Research and Regional Cooperation Department. In addition to the contributors
named in the byline and the authors of the background papers, the theme chapter
benefited from inputs by Roehlano Briones, Dene Chen, Peter Drury, Yang Du,
Peng Jia, Md. Golam Mortaza, Albert Francis Park, Stefanie Sy, Laura Villadiego,
and Pankaj Vashisht. Detailed discussions with Abdul Abiad, Duncan Campbell,
Jesus Felipe, and Fahad Khan helped clarify critical issues. James Bessen, Nattapong
Puttanapong, Arun Ramamurthy, Priya Ranjan, and Yudo Wicaksono provided
feedback on selected material. The valuable support and guidance of Yasuyuki
Sawada, Juzhong Zhuang, and Joseph E. Zveglich, Jr., throughout the production
process is gratefully acknowledged. Guy Sacerdoti and Josef Yap provided editorial
advice on the theme chapter. Illustrations were created by Rhommell Rico.
Peter Fredenburg advised on ADB style and English usage. Alvin Tubio handled
typesetting and graphics generation, in which he was assisted by Heili Ann Bravo,
Elenita Pura, and Azaleah Tiongson. Art direction for the cover design was by
Anthony Victoria, with artwork from Ana Verayo. Critical support for the printing
and publishing of the report was provided by the Printing Services Unit of the
ADB Office of Administrative Services and by the publications and web teams of
the ADB Department of Communications. Fermirelyn Cruz and Rhia Bautista-
Piamonte provided administrative and secretarial support. The Department of
Communications, led by Vicky Tan, Omana Nair, and Erik Churchill, planned and
coordinated the dissemination of Asian Development Outlook 2018.
Definitions
The economies discussed in Asian Development Outlook 2018 are classified
by major analytic or geographic group. For the purposes of this publication,
the following apply:
• Association of Southeast Asian Nations comprises Brunei Darussalam,
Cambodia, Indonesia, the Lao People’s Democratic Republic, Malaysia,
Myanmar, the Philippines, Singapore, Thailand, and Viet Nam.
• Developing Asia comprises the 45 members of the Asian Development Bank
listed below.
• Newly industrialized economies comprises Hong Kong, China; the Republic
of Korea; Singapore; and Taipei,China.
• Central Asiacomprises Armenia, Azerbaijan, Georgia, Kazakhstan,
the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan.
• East Asia comprises Hong Kong, China; Mongolia; the People’s Republic of
China; the Republic of Korea; and Taipei,China.
• South Asia comprises Afghanistan, Bangladesh, Bhutan, India, Maldives,
Nepal, Pakistan, and Sri Lanka.
• Southeast Asia comprises Brunei Darussalam, Cambodia, Indonesia,
the Lao People’s Democratic Republic, Malaysia, Myanmar, the Philippines,
Singapore, Thailand, and Viet Nam.
• The Pacific comprises the Cook Islands, the Federated States of Micronesia,
Fiji, Kiribati, the Marshall Islands, Nauru, Palau, Papua New Guinea, Samoa,
Solomon Islands, Timor-Leste, Tonga, Tuvalu, and Vanuatu.
Unless otherwise specified, the symbol “$” and the word “dollar” refer to
US dollars. Asian Development Outlook 2018 is generally based on data available
up to 9 March 2018.
Abbreviations
ADB Asian Development Bank
ADO Asian Development Outlook
AI artificial intelligence
ASEAN Association of Southeast Asian Nations
BPO business process outsourcing
DLT distributed ledger technology
EEC Eastern Economic Corridor (Thailand)
EEU Eurasian Economic Union
EU European Union
FDI foreign direct investment
FSM Federated States of Micronesia
FY fiscal year
GDP gross domestic product
GFC global financial crisis
GST goods and services tax
GVC global value chain
ICT information and communication technology
IMF International Monetary Fund
IT information technology
LAN local area network
Lao PDR Lao People’s Democratic Republic
Libor London interbank offered rate
M1 money that includes cash and checking accounts
M2 broad money that adds highly liquid accounts to M1
M3 broad money that adds time accounts to M2
mbd million barrels per day
MSMEs micro, small, and medium-sized enterprises
NIE newly industrialized economy
NPL nonperforming loan
OECD Organisation for Economic Co-operation and Development
OPEC Organization of the Petroleum Exporting Countries
PNG Papua New Guinea
PPP public–private partnership
PRC People’s Republic of China
Q quarter
R&D research and development
RMI Republic of the Marshall Islands
ROK Republic of Korea
RPC Regional Processing Centre (Nauru)
saar seasonally adjusted annualized rate
SDA structural decomposition analysis
SMEs small and medium-sized enterprises
SOE state-owned enterprise
TVET technical and vocational education and training
US United States of America
VAT value-added tax
ADO 2018—Highlights
Developing Asia enjoys buoyant prospects as external demand remains strong.
The region is forecast to expand by 6.0% in 2018, just 0.1 percentage points
off the 2017 rate, 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.
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.
Yasuyuki Sawada
Chief Economist
Asian Development Bank