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Asian Development Outlook 2015 Update:
Enabling Women, Energizing Asia
Shang-Jin Wei
Chief Economist
Asian Development Bank
The views expressed in this document are those of the author and do not necessarily reflect the views and policies of the
Asian Development Bank or its Board of Governors or the governments they represent.2
EMBARGOED UNTIL 9:30 AM
Manila/Hong Kong, China/Singapore time
Tuesday, 22 September 2015
Key messages
• Developing Asia’s growth downgraded to 5.8% this year and 6.0% in 2016
– PRC and India projected to grow at 6.8% and 7.4%, respectively, lower than previous forecasts
– Moderating prospects for PRC and India and delayed recovery in industrial countries weigh on the outlook
• Inflation pressures further easing partly due to lower global commodity prices
• Risks have increased (e.g., capital flow reversal, currency depreciation), but still manageable
• Special report: Greater women’s participation in economic activities can boost income by up to 30%
3
Economic outlook:
Developing Asia facing headwinds…
4
f: forecast
…yet still contributing the most to global growth
5
⇒ Asia continues to account for about 60% of global
growth; still fastest-growing region
Percentage contributions to global GDP growth
Regional and global factors
weigh on growth
GDP growth (%)
2015 2016
ADO
2015Update
ADO
2015Update
Major industrial economies 2.2 ↓ 1.9 2.4 ↓ 2.3
United States 3.2 ↓ 2.6 3.0 ↓ 2.9
Euro area 1.1 ↑ 1.5 1.4 ↑ 1.6
Japan 1.1 ↓ 0.7 1.7 ↓ 1.4
6
• Moderating prospects in the PRC and India
• Delayed recovery in industrial countries
Large variations across subregions
7
f: forecast
PRC growth somewhat lower;
projected to average 6.8% in 2015
8
Growth in retail sales and industry value added
Fixed asset investment growth
Stock market (Shanghai Stock Exchange: A Share)
Export and import growth
India’s growth at 7.4% this year;
below earlier forecasts
9
• Slower than expected
implementation of key
structural reforms
• Weaker than projected growth
in advanced economies
• Flagging global trade
Fixed investment
Export growth Investment projects dropped
Indonesia’s growth downgraded to 4.9%
as investment and private spending slowed
Policy and inflation rates
Fixed investment and private consumption growth Support for stronger infrastructure
investment
• Faster capital budget
disbursement
• Capital injection in SOEs involved
in infrastructure
• Accelerating land acquisition
10
Credit growth
ASEAN growth flat at 4.4% in 2015;
pickup delayed to next year
11
f: forecast
ASEAN=Association of Southeast Asian Nations; BRU=Brunei Darussalam; CAM=Cambodia; INO=Indonesia; LAO=Lao
PDR; MAL=Malaysia; MYA=Myanmar; PHI=Philippines; SIN=Singapore; THA=Thailand; VIE=Viet Nam
Inflation further easing
12
f: forecast
Current account surplus maintained
13
f: forecast
Challenge 1:
Capital flow reversal
• Capital flows have been receding since Q2 2014
• Monetary policy dilemma between financial sector stabilization and demand stimulation
• Macroprudential policy provides scope for monetary policy independence
14
Capital flows to selected Asian economies
Note: Emerging Asia consists of the People's Republic of China; Hong Kong,
China; India; Indonesia; Republic of Korea; Malaysia; Philippines; Singapore;
Taipei,China; Thailand; and Viet Nam.
Challenge 2:
Currency depreciation
15
US dollar versus regional currencies
• Depreciation poses a threat to Asian firms with large,
short-term foreign debt but little foreign revenues
• Improving domestic financial systems can mitigate risks
Foreign currency liabilities
relative to foreign currency assets
16
BAN=Bangladesh; CAM=Cambodia; IND=India; INO=Indonesia; KAZ=Kazakhstan; KOR=Rep. of Korea; LAO=Lao PDR; MAL=Malaysia;
MYA=Myanmar; PAK=Pakistan; PHI=Philippines; PRC=People’s Rep. of China; SRI=Sri Lanka; TAP=Taipei,China; THA=Thailand; VIE=Viet Nam
Foreign liabilities / foreign assets refer to banking institutions, deposit money banks, and other depository corporations.
Special topic:
Enabling women, energizing Asia
• Notable progress in enabling women in education and health, but the task of closing gender gap remains unfinished
• Female labor force participation fell from 56% in 1990 to 49% in 2013; below men’s 80%
• Women earned 77% of average male earnings
• Enabling women can boost per capita income by up to 30% (though smaller effect on GDP)
17
Advancements in women’s education…
18
…and life expectancy
19
but significant gaps in women’s workforce participation
Gender gap in labor force participation rates, developing Asia
Female labor force participation rates
20
0
15
30
45
60
75
1990 1994 1998 2002 2006 2010
%
Middle East and North Africa
Advanced economies
Sub-Saharan Africa
Developing Asia
Latin America and the Caribbean
World
20
23
26
29
32
1990 1994 1998 2002 2006 2010
Percentage
points
Note: Gender gap is male minus female labor force
participation rates.
Source: ILO. International Labour Organization. Key Indicators of the Labour Market.
Factors inhibiting women’s workforce entry• Cultural and social norms
• Legal and institutional frameworks
• Access to economic opportunities
21Source: World Bank. Women, Business and the Law 2016
database, http://wbl.worldbank.org/data
Source: World Values Survey Association. World Values Survey Wave 6: 2010–
2014. www. worldvaluessurvey.org ; International Labour Organization. Key
Indicators of the Labour Market.
Rising income does not automatically lead
to narrower gender gap in labor force participation
22
PRC
India
Indonesia
Republic of Korea
Afghanistan
Bangladesh
Lao PDRNepal
Pakistan
Philippines
Singapore
Female to male labor force participation ratio
0
.3
.6
.9
1.2
6 8 10 12Log GDP per capita, PPP(current international $)
Gender gap in labor force participation and income, 2013
Sources: ADB estimates using data from the International Labour Organization. Key Indicators of the Labor Market online
database; CEIC Data Company; World Bank. World Development Indicators online database (all accessed 4 September 2015)
Women are underrepresented in governments
23
Source: Inter-Parliamentary Union. Women in Politics 2015.
Percentage of women in ministerial positions,
selected Asian economies, Jan 2015
0
5
10
15
20
25
30
PAK AZE PNG THA SIN MAL KOR BAN SRI VIE PRC KAZ FIJ PHI IND INO FSM
24Source: Inter-Parliamentary Union. Women in Politics 2015.
PAK=Pakistan, AZE=Azerbaijan, PNG=Papua New Guinea, T HA=Thailand, SIN=Singapore, MAL=Malaysia, KOR=Republic of Korea,
BAN=Bangladesh, SRI=Sri Lanka, VIE=Viet Nam, PRC=People’s Republic of China, KAZ=-Kazakhstan, FIJ=Fiji, PHI=Philippines, IND=India,
INO=Indonesia, FSM=Federated States of Micronesia
Female shares in boardrooms
25Sources: Bloomberg and annual reports of top 10 companies for each country.
Women earn less:
26
Percentage difference in male/female wages vs. GDP per worker
Sources: ADB estimates using data from the International Labour Organization. Key Indicators of the Labor
Market online database; CEIC Data Company; World Bank. World Development Indicators online database
(all accessed 4 September 2015)
-1
-.5
0
.5
8 9 10 11GDP per worker (in logarithm)
Factors responsible for earnings gap
• Occupational segregation by rule or by norm
• Less work experience because of breaks in
women’s employment due to childcare
• Differences in skill levels
• Gender biases
27
A simulation model of gender and income in Asia
28
Sources: Jinyoung Kim, Jong-Wha Lee, and Kwanho Shin, “A Model of Gender Inequality and Economic Growth”; Jinyoung Kim, Jong-
Wha Lee, and Kwanho Shin, “Gender Equality and Economic Growth in Korea”; background papers for the ADO 2015 Update theme
chapter.
Eliminating gender inequality can increase
per capita income by over 30%
• With a complete elimination of inequality:
– Female labor force participation increases from 54% to 67.5% (Korea study)
– Annual per capita growth rises from 3.6% to 4.1% (Korea study)
– Per capita income rises by 30% in a generation in a hypothetical gender-equality economy
– Effect on aggregate income is smaller because the interventions tend to reduce fertility rates
29
Sex ratio imbalances
can have economic consequences
• Men work harder, save more, and engage in more entrepreneurial activity
• Parents of sons tolerate unsafe workplace practices; employers respond by underinvesting in workplace safety, leading to higher work-related accidents and mortality
• Increase in prices of status goods such as housing
30
Source: Population Division, Department of Economic and Social Affairs,
United Nations Secretariat. World Population Prospects: The 2015 Revision.
http://esa.un.org/unpd/wpp/DVD
Sex ratios at birth in developing Asian economies
Policy options to enable women
• Provide better education and skills and vocational training to match labor market needs
• Remove legal impediments to gender equity, lift constraints on entrepreneurship, expand ICT access, ensure fair compensation
• Improve information on available employment resources and jobs and encourage parental leave, child care, and flexible work arrangement options
• Increase women’s mobility and security—which inhibit both higher education and training attainment and labor force participation—through family-friendly infrastructure
31
Competition can help reduce inequality
• Trade openness encourages firms to be more competitive, making discrimination costly
• Examples:
– Footwear industry in Cambodia and Viet Nam
– Readymade garment industry in Bangladesh
– Electronics assembly in the PRC; Taipei,China; and Thailand
– Business process outsourcing in India and the Philippines
32
Key messages
• Developing Asia’s growth downgraded to 5.8% this year and 6.0% in 2016
– PRC and India projected to grow at 6.8% and 7.4%, respectively, lower than previous forecasts
– Moderating prospects for PRC and India and delayed recovery in industrial countries weigh on the outlook
• Inflation pressures further easing partly due to lower global commodity prices
• Risks have increased (e.g., capital flow reversal, currency depreciation), but still manageable
• Special report: Greater women’s participation in economic activities can boost income by up to 30%
33
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