What’s new: Asia has outshined many other regions in terms of inflation control in the post-pandemic era, thanks to its more elastic labor supply and younger workforce, said Zhang Tao, chief representative of the Bank for International Settlements (BIS) office for Asia and the Pacific.
Emerging Asian economies have a more elastic labor supply than developed economies, especially in low-skilled labor sectors, Zhang said Thursday at the Caixin Summit. Despite a growing aging population in some countries, the whole of Asia still benefits from a younger demographic structure, he said.
Other factors that help mitigate inflation include the thriving gig economy in emerging Asian countries, and agriculture’s crucial role as a vast reservoir of talent, the BIS official added.
The logic: Generally speaking, full employment can curb inflation by avoiding a sharp increase in labor costs that would lead to a surge in the prices of goods and services. Meanwhile, full employment can increase the overall economic production capacity, which also helps suppress inflation.
Contact reporter Qing Na (qingna@caixin.com) and editor Bertrand Teo (bertrandteo@caixin.com)
Get our weekly free Must-Read newsletter.
