Asia Leading the Way

• Author: Anoop Singh
• Position: Director of the IMF's Asia and Pacific Department.

THE recent crisis has underlined the emergence of Asia as a global economic powerhouse. Several dynamic economies in the region are generating growth outcomes that register on a global scale and are helping pull the world economy out of recession. China and India are leading the way, but the phenomenon is by no means limited to these two countries. Asia’s economic importance is unmistakable and palpable.

Based on expected trends, within five years Asia’s economy (including Australia and New Zealand) will be about 50 percent larger than it is today (in purchasing-power-parity terms), account for more than a third of global output, and be comparable in size to the economies of the United States and Europe. By 2030, Asian gross domestic product (GDP) will exceed that of the Group of Seven major industrial economies (G-7) (see Charts 1 and 2).

It is only natural, then, for Asia’s voice to become increasingly influential in global economic and financial discourse. Already, six of the Group of 20 major economies (G-20) are from the Asia-Pacific region. Asia accounts for just over 20 percent of IMF voting shares, and this weight is certain to rise as the IMF pursues reforms to bring countries’ voting shares more closely in line with their role in the world economy. With the right policies, this economic success is likely to continue and further improve living standards for Asian people, transforming the livelihoods of almost half the world’s population.

Consolidation of the recovery is still the main challenge for the world economy. Although Asia was not heavily exposed to the kinds of toxic securities that caused problems elsewhere, the region is an important participant in world trade, and its exports were hurt by the collapse in demand from advanced economies. The impact of the external shock was mitigated for countries with large domestic demand bases, such as China, India, and Indonesia, and some of the commodity producers, such as Australia, but the more export-oriented economies experienced particularly sharp downturns. However, economies across the region rebounded strongly, and by end-2009 output and exports had returned to precrisis levels in most of Asia, including in the hardest-hit economies.

New growth frontiers

At least two notable features mark the ongoing global recovery from Asia’s perspective. First, unlike in previous global recessions, Asia is making a stronger contribution to the global recovery than any other region. Second...