ADO 2013 features a special chapter on Asia’s energy challenges. The region needs an ample supply of clean, affordable energy to continue its rapid growth in the coming decades.
ADB’s Asian Development Outlook (ADO) 2013 estimates that regional economic growth in the Asia Pacific region will pick up to 6.6 per cent in 2013 and reach 6.7 per cent in 2014. This is a distinct improvement on 2012, when growth stood at just over 6 per cent. Consumer prices are expected to rise by 4.0 per cent in 2013 and 4.2 per cent in 2014, up from 3.7 per cent last year.
Leading regional economies are settling into a pattern of more moderate, more sustainable growth, founded on new opportunities nearer to home, including domestic consumption and intra-regional trade. Meanwhile, Asia’s contributions to global imbalances—its persistent current account surpluses—are smoothly winding down. Yet, developing Asia’s recovery phase remains vulnerable to shocks. Strong capital inflows could feed asset bubbles, for example.
Asia’s energy challenge
ADO 2013 features a special chapter on Asia’s energy challenges. The region needs an ample supply of clean, affordable energy to continue its rapid growth in the coming decades. To achieve energy security, developing Asia must actively contain its rising demand, aggressively explore new supply sources and technology, and progressively integrate regional energy markets and infrastructure.
ADO 2013 key messages include the following:
- Developing Asia’s gross domestic product is forecast to expand by 6.6 per cent in 2013 and 6.7 per cent in 2014, following the slower 6.1 per cent pace in 2012;
- Growth will rebound in the People’s Republic of China (PRC), from 7.8 per cent in 2012 to 8.2 per cent in 2013 and 8.0 per cent in 2014, driven by strong consumption and investment;
- India’s growth has the potential to pick up from 5.0 per cent in 2012 to 6.0 per cent in 2013 and 6.5 per cent in 2014, but the South Asian giant must create a more favourable environment for investment if it is to sustain this higher rate;
- Southeast Asia is benefiting from robust domestic demand and greater trade with its neighbours in the region;
- Continued sluggishness in the United States (US), euro area, and Japan suggests that developing Asia must continue to shift toward more domestic demand and trade with emerging markets;
- Inflation is expected to tick up from 3.7 per cent in 2012 to 4.0 per cent in 2013 and 4.2 per cent in 2014. These pressures remain manageable for now, but will need to be monitored closely, especially as strong capital inflows raise the spectre of potential asset market bubbles;
- Developing Asia’s favourable fiscal position cannot be taken for granted, as longer-term structural issues need to be addressed to ensure inclusive growth in the future;
- Political risks are emerging as the main threats to the region’s continued robust growth over the forecast horizon;
- With its rising prominence in the global economy, developing Asia has become a major player in commodity markets;
- Developing Asia’s energy needs will expand in tandem with its growing economic influence, but its own endowment is insufficient;
- Expanding renewable energy sources will not be enough to meet future demand. Consequently, Asia needs to invest in making conventional power cleaner and more efficient; and
- Asia must aspire to the degree of regional cooperation and integration in energy by 2030 that currently prevails in Europe.