Pacific stands to benefit from Asia's growing middle class

Transcript

Pacific island countries should be planning now to cater for the hunger for luxury goods and holidays from Asia's growing middle class.

That's the view of economists at the Asian Development Bank who've just put out their latest economic report for the region.

A senior economist with the ADB, Christopher Edmonds, told Sally Round that the region is already benefitting from stronger links with the Asian economies and can gain more with targeted policy reforms and investment.

CHRISTOPHER EDMONDS: The report looks at three main channels that we see the Pacific economies benefitting and they are currently benefitting from a lot of these things. So I mean the staple remains across the countries at a regional level is the traditional resource based exports of the country. So Asian demand figures very prominently in the international prices for things like crude oil, timber, tuna. In that area, I think the challenge for the Pacific countries is really managing the extraction and the sustainable use of those resources because a lot of them are renewable or even non-renewable resources so getting the most out of that and trying to ensure that the countries benefit from those exports. The other major trend we see in Asia is Asia's growing middle-class and we really see that as generating a lot of increased demand for luxury and niche goods that the Pacific economies can offer at internationally-competitive prices.

SALLY ROUND: So what are you talking there? are you talking about organic produce, that sort of thing?

CE: It could be the aquaculture products like pearls, sea-cucumbers, things like that. The cosmetics, Fiji and Vanuatu have somewhat successful cosmetic lines already, taking advantage of the virgin coconut oil. You have handicrafts and obviously tourism. Tourism tends to be a luxury good or a good that as people get more income they tend to spend more. So a rising Asian middle class means that we can expect a lot more demand for the tropical paradise type vacations that sort of epitomise tourism to the Pacific. The last thing that we highlighted in the report, and this is a little further off, is looking at population aging in Asia and how that could potentially create opportunities for some of the economies in terms of retirement locations and that is also probably true for Australia and New Zealand with population aging and to some extent maybe we are already seeing a little bit of this in the Cook Islands among some New Zealand retirees and also maybe Vanuatu with some of the Australian retirees. To take advantage of these opportunities all the countries really do need to work on developing their hard and softer institutional infrastructure so to reduce trade costs, to improve their communication with the outside world, as well as to invest in the human resources and health systems. If you think about retirees those are going to be key investments that the countries will need to develop and which will take a long time to develop if they are to take advantage of these opportunities.