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Economic growth performance in the Asia-Pacific region continues to improve on the back of firmer global demand and stable inflation. The tasks at hand are to ensure that such economic performance is sustained over time, that it benefits everyone and that any adverse environmental implications are minimal.

Financial risks and protectionist trade measures weigh on the near-term macroeconomic outlook, while medium-term challenges, such as lifting the region’s potential for economic growth and reducing poverty on a sustained basis, persist. Furthermore, while rapid technological advancements present immense opportunities, they can also pose considerable challenges in terms of job polarization and income and wealth inequalities. China’s pursuit of innovative, inclusive and sustainable economic growth could also have important regional impacts through trade, investment and other channels.

The implementation of the necessary policy initiatives will require not only the channelling of existing financial resources of both the public and private sectors towards sustainable development, but also the mobilization of additional financial resources.

The Economic and Social Survey of Asia and the Pacific 2018 contains an examination of how Governments of countries in the Asia-Pacific region could increase domestic public financial resources and leverage private capital to strengthen their long-term economic prospects. It contains estimates on how much additional finance countries may mobilize from such measures as reforms in tax administration or tax incentives, introduction of carbon taxes, prudent sovereign borrowing from financial markets and creation of an enabling environment for public-private partnerships.

Chapter 1

The first chapter of the Survey for 2018 provides a macroeconomic assessment of the Asia-Pacific region and its subregions, with a discussion of risks to the economic outlook. Moreover, it highlights medium-term challenges associated with productivity growth and decent jobs. In the light of such risks and challenges, the chapter lays out policy considerations in the areas of monetary and financial policy, fiscal policy, structural reforms with a focus on fostering inclusive innovation, and other measures to achieve sustained, inclusive and sustainable economic growth. A special section on China’s economic transformation highlights both the challenges of improving the quality of growth and managing potential regional spillover effects.

Chapter 2

The second chapter examines how Asia-Pacific economies could increase domestic public financial resources and leverage private finance to support sustained, inclusive and sustainable economic growth. On strengthening public finance, the chapter estimates the revenue impact of better tax administration and policies aimed at broadening the tax base, particularly the introduction of carbon taxes and the rationalization of tax incentives for foreign direct investment. The chapter also considers how to enhance the role of prudent sovereign borrowing from financial markets in supporting the fiscal space. On leveraging private capital, the chapter studies how an enabling policy environment could help catalyze investment in infrastructure projects, especially under public-private partnerships, and how financial intermediation could be deepened through widening the investor base and diversifying financial instruments. Overall, the chapter suggests that the prospect for mobilizing development finance is promising. The success of these resource mobilization strategies is conditional on careful implementations and closer regional cooperation.

Chapter 3

The goal of chapter 3 is to delve into certain aspects of financing for development issues from a subregional perspective, and to share knowledge and lessons learned regarding dealing with challenges that are specific to certain subregions. The underlying premise of this chapter is that, for countries to be able to make the investments required towards implementing the 2030 Agenda, a necessary condition is that sufficient financial resources be made available. Depending on the actor that is taken as a reference (public or private sector), this basic premise has different implications. For the public sector, it means that public authorities should be able to mobilize a significant, stable flow of financial resources. For the private sector, this means that firms should have access to credit or equity to undertake investments. Both perspectives are comprised in the analyses comprised in this chapter.

Policy Briefs


  • Foreword
  • Preface
  • Executive Summary
  • Acknowledgments
  • Explanatory notes
  • Acronyms
  • CHAPTER 1 Economic outlook and policy challenges
    1. Introduction
    2. Economic performance and outlook
    2.1. Global context – stronger economic growth and associated challenges
    2.2. Economic growth in Asia and the Pacific – a broad-based upturn and stable outlook
    2.3. Inflation – picking up but still low
    2.4. Consumption, investment and trade dynamics – strengthening the drivers of growth
    3. Subregional economic updates – diversity of the region
    3.1. East and North-East Asia
    3.2. South and South-West Asia
    3.3. North and Central Asia
    3.4. South-East Asia
    3.5. Pacific
    4. Macroeconomic risks and medium-term challenges to the economic outlook
    4.1. Protectionism, financial risks and commodity prices – examples of key macroeconomic risks
    4.2. Potential growth, technology and future of work
    4.3. China’s economic transformation: impacts on Asia and the Pacific
    5. Economic policy considerations
    5.1. Monetary and financial policy – securing macrofinancial stability
    5.2. Fiscal policy – making effective use of fiscal space
    5.3. Structural reforms – fostering inclusive innovation
    5.4. Quality of growth – enhancing economic resilience
    6. Concluding remarks
  • CHAPTER 2 Mobilizing finance for sustained, inclusive and sustainable economic growth
    1. Introduction
    2. Sizeable investment gaps to achieve sustainable development
    3. Mobilizing development finance: flow of funds and selected focus areas
    3.1. Flow of funds
    3.2. Focus areas of this chapter
    4. Strengthening tax revenues
    4.1. Improving tax administration
    4.2. Expanding the tax base
    5. Prudent sovereign borrowing from financial markets
    5.1. Room for a higher level of public debt
    5.2. Increasing the role of public bond financing
    6. Leveraging private finance
    6.1. Enhancing the policy environment for public-private partnerships
    6.2. Deepening financial intermediation
    7. Concluding remarks
  • CHAPTER 3 Selected issues in financing for development: a subregional perspective
    1. Introduction
    2. Potential of financial technology in East and North-East Asia
    2.1. FinTech affects the entire economy and is growing phenomenally
    2.2. Major drivers of the FinTech revolution
    2.3. Regulatory framework as a driver of FinTech: policy considerations
    3. Developing local currency bond markets in South-East Asia
    3.1. The role of local currency bond markets in mobilizing financial resources
    3.2. Segments of the market: government and corporate bond markets
    3.3. Challenges: liquidity, number and types of issuers and credit quality
    3.4. Initiatives to boost the development of corporate local currency bond markets
    3.5. Policy considerations
    4. Managing fiscal volatility in the Pacific
    4.1. Fiscal volatility is an impediment to stable and predictable fiscal resources
    4.2. Root causes of fiscal volatility
    4.3. Policies to manage implications of fiscal volatility
    5. Reforming tax systems in South and South-West Asia
    5.1. Government challenges in financing sustainable development through tax systems
    5.2. Problems facing tax systems
    5.3. Factors limiting tax system effectiveness
    5.4. Policy recommendations
    6. Boosting the access of micro-, small and medium-sized enterprises to finance in North and Central Asia
    6.1. Role of small and medium-sized enterprises in private sector development and structural transformation
    6.2. Constraints in access to finance by the micro-, small and medium-sized enterprises
    6.3. Policy recommendations
    7. Concluding remarks
  • Annexes
    I. The Tax Administration Index: methodologies and regression analysis
    II. Foreign direct investment tax incentives
    III. Carbon tax
    IV. Sovereign bond financing
    V. Determinants of public-private partnership infrastructure investment
  • References
Macroeconomic Policy and Financing for Development Division +66 2 288-1234 [email protected]