Back to search

Economic Outlook for Southeast Asia, China and India 2017. ADDRESSING ENERGY CHALLENGES

Increased investment in renewable energy is key to spur sustainable growth in Emerging Asia. Overall, the growth prospects of the Emerging Asian economies (Southeast Asia,China and India) are expected to remain robust over the medium term amid global economic uncertainty.

Risks and policy challenges of economic outlook to 2021.

Emerging Asia is projected to experience favourable growth over the near and medium terms. To harness the region’s growth potential, it is critical for policy makers to implement effective policies to cope with various risks, including:

  • Coping with slow export growth;
  • Managing the impact of zero and negative interest rates in OECD economies; and
  • Addressing slowing productivity growth.

Demographic and economic growth, among other socio-economic factors, are expected to boost energy consumption in Emerging Asia over the coming decades, according to the Outlook’s special chapter. While fossil fuels will continue to satisfy the bulk of energy demand, the region has adopted specific targets for the deployment of renewable energy capacities, for example solar and wind powers. Policy mechanisms such as feed-in tariffs are fostering the development of renewables that are not yet competitive with conventional energy sources, but setting rates remains a challenge.

The installed capacity of renewable energy is increasing. Due to their size, China and India are making large contributions to global investment in renewable energy. Among ASEAN countries, Viet Nam, Thailand, Malaysia and Lao PDR are the main contributors, with particularly large investments in hydropower.
Addressing the barriers to investment in renewable energy through adequate policies will be essential for developing alternative energy sources in the region.

According to the report, greenfield Foreign Direct Investment (FDI) enables the transfer of capital, technology and expertise in renewables. India, China and Indonesia have received the largest inflows, accounting for more than 60% of the region’s total. FDI also supports the expansion of green jobs. However, setting the right conditions for the development of renewable energy in Emerging Asia requires addressing the challenges of grid access, administrative barriers and energy pricing mechanisms.