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NEWS

ADB on Asia: How it will change in 15 years

www.adb.org
26 August 2016

Keynote speech by ADB Vice-President Stephen Groff at the AIESEC-ADB Youth Movers' Discussion on 23 August 2016 in Jakarta, Indonesia. 

Highlights:By 2050, there will likely be more people over the age of 65 than under 14.By 2030, rising income disparities will create social discord if left unaddressed.ADB helps governments develop partnerships for inclusive and sustainable growth.

 

Dear Colleagues and friends of ADB,

 

It is my pleasure to be here today at the Youth Movers' Discussion. On behalf of the ADB, I would like to thank AIESEC Indonesia for partnering with us in organizing this event. I'm truly happy to see so many bright young people here this afternoon.

I have been asked to speak on how I envision Asia will look like in 15 years. This is by no means an easy task, but let me begin by sharing three mutually dependent mega trends that ADB is observing and their implications for the region, and for you.

Mega trends in the region

First, we expect that by 2030, Asia's population will grow, prosper and become highly urbanized, but will also age. Five of the 7 countries with the fastest population growth by 2030, will be in Asia1, and nearly two billion of the 2.4 billion new middle class consumers created globally, are also expected to be from Asia. In addition, nearly 70% of Asia's population will live in cities and produce 47% of the region's GDP growth. But the population will also age. By 2050, for the first time, there are likely to be more people over the age of 65 than under the age of 14.

Second, these structural changes will exacerbate social tensions and increase environmental strains. While we expect high rates of economic growth to wipe out abject poverty by 2030, rising income disparities will create social discord if left unaddressed2. Meanwhile, the intense competition for scare natural resources (as we are witnessing today), will only worsen as resources such as water come under increasing strain. In fact, global insecurity is cited as a top risk factor for economic growth by more CEOs than disruptions caused by asset bubbles in the next 12 months ( Source: McKinsey).

Third, the region is under going rapid technological transformation even in rural areas, and increasing digitization could worsen unemployment (especially youth unemployment). We are seeing signs of that today with jobless growth that has forced many young people to return to live with their parents, or at least continue being economically dependent on them.

So what do these trends mean for development agencies such as ADB and more importantly, what do they mean for you?

Implications for Asia and the Pacific

First, the changing structure of our region's population means that we can expect older people to continue living and working longer. This in turn means that Asia's social protection mechanisms such as healthcare and pension schemes will need to be strengthened. This also means that the region will need to become more integrated with open labor migration policies, so that workers from a labor surplus region can work where there is demand for their skills. In this regard, ADB is supporting the ASEAN Economic Community with technical and policy advisory support to accredit certain skills to allow this mutually beneficial exchange of labor to happen.

Second, in order to deal effectively with the risks posed to Asia's prosperity from growing income inequalities and the strain on natural resources, the nature of governance will need to change. Governments are increasingly recognizing that they can no longer bear the sole responsibility for inclusive and sustainable growth through services that decrease social disparities or increase opportunities whether these be for infrastructure, education, or SME finance. We at ADB are therefore working alongside governments to help governance models evolve beyond regulation to include partnerships with the private sector, with civil society organizations (such as yours) as well as Research institutes to develop inclusive and sustainable growth policies and institutional mechanisms.

Third, the rapid technological advances being experienced by Asians, especially its youth, is something that governments need to harness for the future. Rapid advancements in artificial intelligence, robotics and telecommunication mean that a number of repetitive jobs are being made redundant, even in government. This has implications not only for education and skills policies but how governments and citizens design cities, public transportation networks, logistics and building codes for the future.

Let me conclude by saying that Asia, home to over half the world's population, bears great responsibility for this planet. How Asia navigates development pathways will impact not just our generation but several future generations. As future leaders of Asia, your understanding of issues, your abilities to garner support, and your leadership in making difficult choices will be critical if we are to achieve our vision of sustainable and inclusive growth for all.

I wish you a fruitful discussion. Thank you.