TOKYO (Reuters) – Asia must accelerate digitalisation and business reform to tackle challenges to achieve sustainable growth, Bank of Japan Governor Haruhiko Kuroda said on Wednesday, highlighting vulnerabilities in supply chains and social infrastructure.
Kuroda said Asia’s economic conditions remain severe as a full-fledged recovery in global growth following the COVID-19 pandemic appears to be “much further down the road”.
But the downturn in Asia’s economy has been moderate compared with other regions due partly to solid global demand for IT-related goods produced in the region, he said.
“From a longer-term perspective, Asia must address its challenges in order to achieve sustainable economic growth” such as its low service-sector productivity and ageing populations, Kuroda said. Digitalisation is among key factors in this, he added.
“Japan is one of the most rapidly ageing societies and we have been discussing how to tackle the problems arising from an ageing society,” Kuroda said.
“I’m not so pessimistic about the impact of population ageing on the society… Encouraging digitalisation will be a driving force for raising growth potential,” he told a virtual meeting of the U.S. National Association for Business Economics.
Japan’s new prime minister Yoshihide Suga has made digitalisation a key policy issue, as work-from-home and social distancing policies to prevent the spread of the virus heighten the need to speed up reform on that front.
The pandemic has also exposed vulnerabilities in Asia’s supply-chain networks, though many companies are already making efforts to diversify production and procurement, Kuroda said.
Business reform to adapt to changing consumer trends, such as increased demand for e-commerce and online healthcare services, may boost Asia’s service-sector productivity, said Kuroda, a former head of the Asian Development Bank.
(Reporting by Leika Kihara; Editing by Chang-Ran Kim and Christopher Cushing)