The emerging economies of Asia are seen shifting toward more sustainable growth based on domestic demand instead of exports, the Asian Development Bank (ADB) has said. But rising inequalities urgently need to be fixed.
Despite a slowdown in economic expansion, Asia's emerging economies would continue to grow by a robust 6.9 percent this year, supported by rising domestic consumption, the Asian Development Bank (ADB) said in a regional report published Wednesday.
The bank surveyed 45 newly industrializing countries except Hong Kong, Japan, Singapore South Korea and Taiwan, saying that growth in these emerging economies will "cool somewhat" before "edging higher" to 7.3 percent in 2013.
Continued uncertainties in the eurozone and a further decline in global trade would pose the biggest threats to the growth outlook, ADB Chief Economist Changyong Rhee said in a statement.
"At the same time, Asian economies are gradually diversifying into new markets, private consumption is trending up and the region has limited direct financial exposure to the eurozone, which should help sustain its momentum," he added.
Growth in China - the world's second largest economy - is seen slowing by the bank to 8.5 percent this year and 8.7 percent in 2013 compared with 9.2 percent in 2011.
The region's other emerging giant, India, is expected to grow by 7.5 percent in 2012, while southeast Asia's economies are forecast to expand 5.2 percent - up from 4.6 percent in 2011.
In its report, ADB noted that Asia had lifted people out of poverty at an "unprecedented rate," but its recent growth had been marked by "widening income disparity" between the super-rich and the rest of the populations.
"Inequality leads to a vicious circle, with unequal opportunities creating income disparities that in turn lead to dramatic differences in future opportunities for families," Rhee told reporters in Hong Kong.
If the "spoils of growth" had been more evenly distributed, he added, an additional 240 million people - or 6.5 percent of emerging Asia's population - would have moved out of poverty in the past decade.
Warning that rising inequality would undermine social cohesion and the quality of governance, Rhee said that "if this trend continues, Asia may lose one of its strong points."
Therefore, ADB urged governments to boost spending on health and education, cut fuel subsidies and broaden the sources of tax revenue to address rising inequality.
uhe/gb (AFP, dpa, AP)