Bank of Thailand Governor Prasarn Trairatvorakul warned that before Asian nations are moving forward, they need to address structural bottlenecks to ensure sustainable development.
At The Nation’s 43rd Anniversary
International Conference on Friday, in his opening speech on "Asian and
Thai Economies in a Volatile World", Prasarn said that the apparent
slowdown in Asia, despite gradual improvement of the advanced economies,
lends support to the idea that Asia also has its own structural
bottleneck issues to deal with.
"The time is ripe for all parties
involved to look beyond short-term fluctuations and give serious
consideration to longer-term structural issues that are holding back
Asian potential growth. This is the second topic of my talk today: what
can Asia do to sustain its high pace of growth in the post-crisis
world?"
He said that due to the global financial
crisis, policy makers in emerging countries have been focused on
demand-side management, through monetary or fiscal policy stimulus. But
boosting demand alone could only get us thus far. The real lift of
potential growth of the economy must essentially come from supply-side
progress. This refers to either the more abundance or the better use of
capital and labor inputs in the economy. Although Asia's potential
growth remains higher than in other regions, recent studies pointed to a
possible reduction in trend growth since the 2008 financial crisis.
"Two common drags to long-term growth
among emerging Asia are the labour shortage and the decline in
productivity growth," he said.
"I would like to urge that, in searching
for labor market solution, attention must also be paid to the problems
of the wage structure, since at the going wage, price mechanism and its
signaling function do not work efficiently enough to clear the labor
market to eliminate this skill mismatch," he said.
source: Eleven Myanmar
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