President tells Commonwealth Business Forum in Perth:

Asia’s share of global output will hit 53 percent by 2050

By Dinesh WEERAWANSA in Perth, Australia

President Mahinda Rajapaksa said that Asian and Pacific economies, that are universally accepted, are playing a key role in global economic growth and stability.

Delivering the keynote address at the Commonwealth Business Forum (CBF) in Perth on Thursday, the President said that it is not surprising that the much talked of BRIC nations, consisting of three countries from the Asian region, India, Russia and China are growing in importance in the region.

He said that the importance of the Asian economy, which has been clearly visible over the past couple of decades, is probably best reflected in the recent research findings of a recent ADB study. According to the study, Asia’s share of the global economic output was as high as 58 percent in the year 1700. “Thereafter, over a period of 260 years from 1700 to about 1960, Asia’s share declined steadily and dropped to around 16 percent by 1960. However, over the past 50 years, Asia’s share in global economic development has been steadily climbing again, and the ADB projections are that by the year 2050, Asia’s share of global output would reach around 53 percent,” he said.

He said that the ADB projections are indeed remarkable since the turn around is expected to be recorded in just 90 years, whereas the decline was experienced over a period of 260 years. “Asia’s fast growth track is also evident from many of its indicators that we see at present. But, we must appreciate that this continuous transformation would not take place unless the Asian nations continue to take the right step.

That is why the current political and economic leaders have a great responsibility in guiding the Asian nations to prosperity, in a sustainable path. Such a journey will encounter many risks and challenges,” the President said.

President Rajapaksa said that one of Asia’s key challenges will be the balance “regulation against innovation”. “At the same time, our nations will have to continuously stimulate our economies and not allow our systems to falter or fail.

We will also have to face the challenge of dealing with commodity markets that are increasingly being used as financial markets by a large segment of investors,” he said.

“Today, we see hedge funds investing in orange juice, wheat flour and rice as financial instruments. Such investment appetites place enormous pressures on global commodity prices, which in turn, challenge the political and economic structures of many nations,” he said.

President Rajapaksa said that the fast growth in many Asian nations raise expectations of its people, who look for better standards of living and greater well-being. “Fulfilling these expectations is another major task for Asian political and economic leaders. At present, many advanced nations suffer from high unemployment which has resulted in the first signs of political and social unrest being felt in those societies. Such situations, if allowed to escalate unchecked, could give rise to more serious political problems which could further threaten global economic stability,” he said.

The President said that it is, therefore, imperative that the more advanced nations respond quickly and effectively to deal with the rising inequalities and unemployment levels in their societies, without allowing that situation to reach unacceptable proportions.

He said that economies operate on the bedrock of confidence. “If confidence levels decline, rational economic activity that we take for granted, is damaged at the very foundation. In that regard, it is essential that world leaders search for proper responses and act decisively to regain and restore confidence,” he said.