Dr . Srinivasan also highlighted the importance of medium-term priorities and structural reforms geared towards improving productivity , improving connectivity and digitalisation
Helicopter production in Asia .
towards improving productivity , improving connectivity and digitalisation .
“ All these are all country-specific but it ’ s important to continue embarking on these reforms because those are important to be done at the same time as you think about near-term policies ,” he said .
The China effect
At a time of uncertainties , how do you assess the impact of the Chinese economy on Asian economies and the wider global economy ?
“ Whenever China slows , it has a bearing on the global economy and notably on Asian economies . China contributes almost a third to global growth this year . So , again , if China slows , it has a bearing . What we have found Automotive production in Asia . is that , when Chinese growth declines by one percentage point , on average other economies ’ growth declines by 0.3 percentage points over the medium term . So , it ’ s even more important for Asian economies because intraregional trade in Asia is more than 50 per cent and a large part of that is China ,” outlined Dr . Srinivasan .
“ In our report , we look at downside scenarios emerging from derisking . We examine two elements ; friendshoring and reshoring . Both of these are scenarios where trade transactions are limited or trade flows between countries are limited . In both these situations , global growth will fall and China ’ s growth will also fall ,” he added .
However , he also highlighted “ the inherent dynamism in the Chinese economy based on remarkable achievements made in human capital , innovation and research ” and believes that it is important to leverage these strengths .
“ Although more than 50 per cent of trade in Asia is intraregional and China is a key player , I think Asian economies should take a lot of credit for how they ’ ve improved their macro fiscal frameworks and the macro fundamentals ,” concluded Dr . Srinivasan . n
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48 | ismr . net | ISMR October 2023