Economic and Social Survey of Asia and the Pacific 2017 Governance and Fiscal Management

Transcription

1 Economic and Social Survey of Asia and the Pacific 217 Governance and Fiscal Management Launch and Panel Discussion on the UN Economic and Social Survey of Asia and the Pacific 217: Korean Perspective 12 May 217, Seoul

2 Main messages Economic growth is relatively modest but steady, and a mild economic expansion is expected ahead. Countries in the region should strengthen domestic and regional drivers of economic growth, given prolonged weakness in external demand and rising protectionist measures Effective fiscal management, backed by improved governance, can improve long-term economic prospects and help address social and environmental concerns. Given the increasing demands on fiscal policy, how governance affects the mobilization and allocation of fiscal resources warrants greater attention. Enhancing transparency and accountability in public fiscal administration is fundamental to improving the quality of governance and achieving better fiscal management.

3 Economic Outlook and Quality of Growth #CS73

4 Asia-Pacific economies lead global economic growth at a less rapid, though steady, pace Growth differential vis-à-vis developed economies is narrowing Share of developing Asia-Pacific economies is increasing Average annual growth (percentage) Percentage share of global output s Baseline projection Alternative scenario Developing Asia-Pacific region Developed global economies Developing Asia-Pacific region Developed global economies Growth differential (percentage points)

5 A firm rebound in exports seem unlikely and private investment needs to rise Export growth has returned to positive territory but remains well below pre-crisis 28 average 3 With few exceptions, private investment is not forthcoming Percentage Percentage Jan-214 Jan-215 Jan-216 Jan-217 China India Indonesia Thailand Russian Federation Average Regional average in Regional average in

6 A modest economic expansion is expected in 217 and 218, with downside risks Real GDP growth (Percentage) Developing Asia-Pacific region East and North-East Asia China South-East Asia Indonesia Thailand South and South-West Asia India North and Central Asia Russian Federation Pacific island developing economies Least developed countries Landlocked developing countries Changes relative to baseline growth (percentage points) Alternative growth scenario for developing Asia- Pacific economies in Scenario 1 Scenario 3 GDP Consumption Investment GDP Consumption Investment Small island developing States

7 East and North-East Asia: Steady but still below-trend economic growth prospects 14 Real GDP growth (%) 1 Consumer inflation (%) East and North-East Asia East and North-East Asia (excluding Japan) Developing Asia-Pacific region East and North-East Asia East and North-East Asia (excluding Japan) Developing Asia-Pacific region

8 While monetary policy shifts to neutral, fiscal policy can be used more effectively Crude oil price and average inflation in selected net commodity importers Fiscal space depends on interest payment, nominal growth, and tax revenues example of India United States dollars per barrel Jan-214 Jan-215 Jan-216 Jan Percentage Percentage of GDP / Percentage points Debt (percentage of GDP) Interest rate-nominal growth differential (left) Inflation (right-hand side) Crude oil price Projected average oil price Projected average inflation (right-hand side) Primary fiscal balance (left) General government debt (right)

9 Widespread poverty and inequality call for enhanced social protection Social protection financing has increased, but mostly on insurance rather than assistance side Social protection coverage has expanded, but with substantial variation across countries 1 35 Percentage of GDP Percentage of working age/ labour force Latest Latest Total public social protection expenditures For working age, excluding health 2 Latest Legal Effective Affilitation to contributory pension schemes Unemployment benefit Asia-Pacific region World Asia-Pacific region World

10 Environmental costs of production can be internalized through various policy instruments Energy intensity remains high especially among oil producers and in China Carbon emissions intensity has declined, but emissions per capita are rising Kg of oil equivalent per 1, dollars GDP (211 PPP) Metric tons of carbon dioxide equivalent per $1 GDP Asia-Pacific region World Asia-Pacific region World

11 Governance and Fiscal Management #CS73

12 Governance and development is a two-way relationship Governance in different regions of the world: perception based index Correlation between governance and potential socioeconomic factors in Asia and the Pacific Developed countries Latin America and Caribbean Level of economic development Asia-Pacific small island developing States Asia-Pacific developing countries Oil exporting countries Average years of total schooling of age group Africa Landlocked developing countries Natural resources rent (Percentage of GDP) Asia-Pacific least developed countries Asian landlocked developing countries Least developed countries Percentage of age group which did not attent school Governance index Rule of law Control of corruption Governance

13 Governance affects both the allocation and efficiency of public expenditures Estimated impact of governance on public sector efficiency in the health sector Georgia Kazakhstan.12 Level of governance and structure of public expenditures Armenia Vanuatu Indonesia Turkey Brunei Darussalam China Sri Lanka Malaysia Mongolia Iran (Islamic Republic of) Maldives Defense expenditures (percentage of total expenditure) Thailand Kyrgyzstan Estimated efficiency change Control of corruption

14 Better governance is associated with higher levels of tax revenues Tax revenues and governance in Asia and the Pacific, Estimated impact of governance on tax revenue collection (25-214) Tax revenue (percentage of GDP) Bangladesh Georgia Afghanistan Singapore Armenia Philippines Cambodia Malaysia Pakistan Nepal Thailand India Governance Bhutan Governance

15 Enhanced transparency and accountability are key to better governance and fiscal management

16 Few examples of policies to improve transparency and accountability Financial disclosure and public expenditure efficiency in selected Asia-Pacific countries Assessment of specific areas of the public expenditure framework in selected Asia-Pacific countries Public sector efficiency in health Financial disclosure (percentage of assessed measures) Tax revenue (percentage of GDP) E-government and tax revenues, Scope, nature and follow-up of external audit Quality and timeliness of in-year budget reports e-government Development Index Availability of information on resources received Public access to key fiscal information Competition, value for money and controls in procurement Effectiveness of internal audit Effectiveness of internal controls for non-salary expenditure Bangladesh India Nepal Pakistan

17 Sub-regional case study on the role of governance: Clean energy innovation policies East and North-East Asia is at the forefront of energy-efficient and renewable technologies Some early gains in terms of improved energy efficiency Policy lessons: 3 desirable aspects of policies to promote innovation for clean energy Well-designed governance structure: Whole-of-government approach and multi-stakeholder partnerships Balanced policy mix between fiscal incentives and regulations Enabling, nonconventional financial system

18 Takeaway Points Supported by steady economic growth, Asia-Pacific region is poised to regain its historical position in the global economy and provide leadership to move towards inclusive and sustainable development Well-being of people depend on much more than just economic growth; there is a need in the region to pay more attention to social inclusiveness and environment sustainability There is room for fiscal policy to take a more prominent role in contributing to long-term economic potential, enhancing social protection and addressing environment degradation. Proactive fiscal policy highlights the vital role of governance: i) to mobilize resources effectively; and ii) use them efficiently. Enhanced transparency and accountability is key to improving quality of governance.

19 Thank you! Please download the Survey at For further information about the publication, please contact: United Nations ESCAP East and North-East Asia Office UNESCAP.ENEA UN_EastAsia