Growth and trade horizons for Asia: long-term forecasts for regional integration

With the emergence of People’s Republic of China (PRC) and India, the economic landscape of Asia and its relation to the global economy have been changed. Against this background, this paper present forecasts for Asian expansion until 2025. It explores a scenario of shifting patterns of regional specialization and their consequences for growth and structural change in the Asian economies. The research findings indicate that:

• trade within the Asian region is far from reaching its potential. If trade within the Asian region can be made more efficient, even by small but continuing improvements in reducing distribution costs, the gains would be much greater than those resulting from tariff or other trade policy reform
• policies that facilitate regional integration and more efficient regional trade can accelerate growth, especially for lower-income Asia
• ASEAN economies will emerge as a “growth bridge” between the dynamic markets of the PRC and India, and growth potential will be transmitted to some of the lowest-income and slower-growing ASEAN economies: Cambodia, Laos, Myanmar, and Viet Nam. Thus, ASEAN economies have the most to gain from Asian economic integration
• to realise the full potential of this process, policies that facilitate trade will be essential. Most important among these will be institutional change and public and private commitments to infrastructure