This TA supports the strategy by (i) helping DMCs gain regular access to information from measurable economic indicators; (ii) providing regular updates and analyses of macroeconomic trends; (iii) sharing insights on the experiences of neighboring economies in addressing development challenges through flagship publications; and (iv) providing economic research support to DMCs for a deeper understanding of immediate economic issues and concerns. Moreover, at the end of the TA, lessons on how ADB reports/publications helped DMC governments compose policy response to emerging needs and challenges can be drawn and be used as reference for on-going and succeeding TAs.
10. This TA will comprise three major outputs with corresponding activities as follows:
a) Macroeconomic surveillance work and analysis: In order to enhance the macroeconomic surveillance of South Asian countries, an Economic Update (EU) report will be published bi-annually for Bhutan Maldives and Nepal . Given data for some of the South Asian countries are scant, patchy and not available on commercial databases, this TA aims to keep policy makers and ADB staff well informed of the economic developments within the region by providing consolidated report on the most recent key macroeconomic data and economic updates of these specific economies. The TA will provide a venue for analysis of higher-frequency data (e.g., inflation, foreign exchange reserves, balance of payments, etc.) that are essential in policy making. Through the EU, the TA also seeks to act as an economic guide post, especially during turbulent times, to assist policy makers and other stakeholders in formulating mitigating policy measures when necessary. The EU will be produced through a concerted effort among SARD focal points and the TA team, with the latter as the coordinating body. The EU will be disseminated widely among policy makers, ADB staff, and other key stakeholders in the region. Also this component has a capacity building element which intends to strengthen the capabilities of the above selected South Asian DMC governments on macroeconomic surveillance through workshops and seminars.
b) Review of major development challenges: This component will see publication of at least two flagship knowledge products on themes of significance for the region . Potential themes include, among others, urbanization, jobs and skills, inflation, energy, etc. The selection of which themes rigorously analyzed will be done by the project steering committee in consultations with DMC governments. Experts will be mobilized to undertake analytical work on the selected topics and an inception as well as consultation workshop will be organized to facilitate discussion on each topic. A dissemination workshop will also be undertaken for each flagship publication where key stakeholders - including representatives of government ministries and agencies, development partners, the private sector, civil society, and academic and research institution - will be invited.
c) Economic policy advice: With deeper integration of South Asian countries into the global economy and robust economic growth, the governments are confronted with new challenges that require diagnosis and solutions in a timely fashion. This component will provide standby research support for policy needs that require immediate redress (e.g., the recent Rupee liquidity crunch in Bhutan, food crisis that may unfold in the region, and the like). Upon the demand/request of the DMC governments, the policy advice component of the TA will conduct assessments and analytical work on development issues faced by DMCs, which will assist in formulating policy measures to address the issues.
|Project Rationale and Linkage to Country/Regional Strategy
South Asian countries have embarked on various trade, investment, and financial reforms since early 1990s which have made their economies more integrated regionally, as well as globally, than ever before. This link to global and regional economies has underpinned the growth of individual South Asian economies seeing robust growth rates in the past years , thus making South Asia one of the fastest growing regions in the world. Indeed, some of the region's economies have demonstrated growing presence in the global financial and trade markets.
However, the region continues to be home to more than 40 percent of the world's total poor who are at risk of being continuously isolated from the upstream benefits of economic expansion. Unfortunately, the poor are exposed to downstream risks brought on by local and global shocks and crises. Recent examples include the commodity price shock resulting from food and oil price hikes that started in 2007 and left poor South Asian households highly vulnerable. Meanwhile, binding constraints that impinge on sector-based development continue to challenge opportunities to inclusive growth and undermine the economies' capability to maintain a robust outlook.
As the South Asian economies become more and more integrated not only within the region but also with other economies in the global setting, they are increasingly confronted with new challenges. There is a growing need for an effective policy response to these challenges, learning from what others may have done successfully. In order to enhance the capacity of policy makers in the region to formulate effective measures in a timely manner, it is critical to improve access to economic updates as well as analytical work and assessment on the emerging issues and to share them more broadly. This will entail the identification and use of proper economic indicators which act as barometers of economic well-being of the DMCs and indicative measures of the impending risks. It also requires a thorough examination and analysis of development issues and economic policies employing such economic indicators. Regular data gathering and monitoring as well as analysis will minimize time lags in both economic surveillance and policy response. At the same time, the need to address development challenges has become even more dire as the poor find themselves more exposed to economic issues.
Thus, the growing exposure of the South Asian economies to global economic trends and countries' opportunities and risks in addressing binding constraints warrants timely, proper, and reasonably regular economic surveillance which will help policy makers minimize downside risks and harness opportunities to support growth and inclusivity. This proposed regional policy and advisory technical assistance responds to this demand.