Asia Can Restart Global Growth

As 2025 dawns, the world seems to be entering an age of anxiety, reminiscent of one hundred years ago, the period between the two World Wars.

- KAUSHIK BASU

That period saw the German hyper-inflation of 1923, the rise of Hitler, and the Great Depression that caused jobs to vanish and incomes to plunge.

Now, the world's politics is polarized, democracy is witnessing a setback in many places, the share of income of workers in the GDP of most countries is falling, and economic inequality is at an intolerable high.

All this is not a natural calamity about which we humans can do little.

To turn the world around from the brink of this existential risk will not be easy but is not impossible.

In this fractious world, Asia has a special responsibility.

In continental comparisons, Asia's economy stands out.

There are richer nations in North America and Europe, but Asia has the lead in growth rates.

The continent's growth performance over the last fifty years has been remarkable, like Europe after the Industrial Revolution.

Go back to 1970.

Barring the notable exception of Japan, Asian countries had per capita incomes well below $1,000.

By 2023, per capita income (all in US dollar) was: India 2,485, Indonesia 4,941, China 12,614, S. Korea 33,121, Japan 33,766, and Singapore 84,734.

More importantly, much of Asia seems poised for another growth sprint.

Given the global situation, nations around the world are facing challenges right now, and Asia is no exception.

Nevertheless, they are in better shape than most other parts of the globe.

Most Asian countries are doing well on savings and investment rates.

In particular, China has made large investments in electric vehicles (EVs) and other environment-friendly goods and services.

This will help China be a major player in the world that is evolving.

Just as the Industrial Revolution changed the character and content of GDP, I believe the world will see a major shift caused by the digital revolution.