Accelerated digital transformation can potentially boost global output, trade, commerce, and employment in Asia-Pacific.
The region would “harvest” an economic dividend of more than $1.7 trillion yearly and create 65 million new jobs derived directly from digital economy from now to 2025. At least this explains the “Asian Economic Integration Report 2021”, recently published by ADB (Asian Development Bank).
But the benefits of the digital economy just will come true if governments in the region provide for the correct policies and reforms.
“Countries in Asia and the Pacific have leveraged rapid technological progress and digitalization to recover and reconnect to the global economy during the pandemic. Technology is helping to forge new global linkages, which offer enormous economic opportunities, but also present new risks and challenges,” said ADB Chief Economist Yasuyuki Sawada. “It is imperative to implement policies and regulations that manage the disruptions and maximize the gains from the burgeoning digital economy, and to lock in these gains through enhanced regional cooperation.”
Asia- Pacific trade and investment flows, hard hit in 2020 but in the path to recovery now
The report notes that the region’s trade performance, while hit hard during the first half of 2020, is expected to recover faster than anticipated. Asia’s merchandise trade volume growth sunk to the bottom at -10.1% year-on-year in May last year, and has recovered gradually, turning into positive territory since September 2020.
Investment flows globally and to the region are estimated to have fallen further in 2020, following a 7.7% slide in foreign direct investment to Asia in 2019 at $510.5 billion.
Despite this, recent firm-level activity in mergers and acquisitions in the region shows signs of recovery, as countries start to reopen and ease some pandemic-related restrictions, The mentioned ADB report shows.
Asia can reap $8.6 trillion from now to 2025 from digital economy
According to the “Asian Economic Integration Report 2021” recently published by the ADB (Asian Development Bank), a 20% increase in the size of the global digital sector can increase global output by an average of $4.3 trillion yearly from 2021 to 2025.
And similarly, Asia and the Pacific would “harvest” an economic dividend of more than $1.7 trillion yearly or more than $8.6 trillion over the 5 years to 2025.
There will be about 65 million new jobs created yearly in Asia and the Pacific until 2025 from increased use of digital technologies, with regional trade also expected to grow by $1 trillion yearly over the next 5 years.
Business-to-consumer revenues of digital platforms reached $3.8 trillion in 2019 globally, with Asia and the Pacific accounting for about 48% of the total or $1.8 trillion, equivalent to 6% of the region’s gross domestic product.
These figures are expected to have significantly increased in 2020 as more business transactions (such as ride hailing, food delivery, and e-commerce) migrated and still are to the digital space amid restrictions imposed to curb the spread of COVID-19.
Just if goverments take the correct measures
Digital platforms and other technology-based tools are providing new growth opportunities for businesses of all sizes and across all industries in the region, a trend which could contribute significantly to the sustainable recovery from the coronavirus disease (COVID-19) pandemic in this part of the world.
Governments in the region can leverage and reap the benefits of the emerging digital economy through policies and reforms to improve digital infrastructure and connectivity, as well as access to them.
These steps include promoting fair competition and improving ease-of-doing business processes, as well as enhancing labor security and social protection measures to align with digital jobs.
The report also underscored the need to focus on data privacy and security, taxation, partnership between public and private institutions, and regional cooperation.