ADB: Learning loss to widen wealth disparities further

The disparities could translate into a 47% wealth gap over the lifetime

by ASILA JALIL / pic by TMR FILE

THE pandemic has led to low term learning losses for students in developing Asia countries due to school closures, which will negatively impact the students’ lifetime earnings.

According to Asian Development Bank’s (ADB) development outlook for the region, it estimated that 7% of student’s expected learning over their lifetime have been lost because of school closures.

The impact of school closures may also exacerbate inequality between the rich and poor students as well as male and female students.

Students from poor areas in the region are expected to lose 33% more learning than those from richer quintiles due to lower access to remote education. This translates to greater exposure to income losses for the group.

“Disparities from these learning losses could translate into a 47% wealth gap over the lifetime.

“Gender gap on learning losses could also result in 28% higher losses for girls than there are for boys,” ADB macroeconomic research director Abdul Abiad said in a webinar yesterday.

“This assumes that there are no remedial measures to recover lost learning. This, thus, translates to expected losses in lifetime learnings for today’s students of about US$3.2 trillion (RM13.5 trillion), which is 13% of developing Asia’s GDP in 2020,” he added.

Meanwhile, GDP growth in developing Asia will continue to be robust despite the rise in inflation.

Abdul said with the positive development in the pandemic front and the reopening of economies, solid exports and robust domestic demand will underpin continued recovery in developing Asia.

“GDP is forecasted to expand by 5.2% this year and 5.3% next year although growth will remain uneven across some regions. The region’s inflation rate is expected to rise from 2.5% last year to 3.7% this year and will accelerate in all sub-region except Caucasus and Central Asia,” he said.

As for Malaysia, GDP is expected to grow 6% this year followed by 5.4% next year.

Headline inflation has increased in the region compared to the rest of the world where inflation surged, said Abdul.

As at December 2021, inflation in developing Asia stood at 3.2% compared to 5% in euro-area, 7% in the US, 8.5% in emerging and developing Europe, 9.7% in Latin America and the Caribbean, and 10.1% in sub-Saharan Africa.

He added that Asia is also far from experiencing stagflation as the region’s inflation rate is still at manageable level despite the increase.

“Stagflation might be an appropriate term to describe what might worry the US as inflation rose to 8% and some indicators signalling possibilities of recession, which might also be used to describe what might happen in Europe.

“It is, however, not the right term to describe Asia’s outlook right now because growth is quite robust, at above 5% this year and next year. Although inflation is rising, it is still manageable and it is hard to describe growth higher than 5% as stagnation, which is one component of stagflation.

“Asia is pretty well-positioned despite the global challenges that we face,” he said.

He added that the faster hikes in the US policy rate, however, may imply aker global economic recovery and slower growth in developing Asia.

The rate hikes could cause inflation to accelerate as exchange rates depreciate along with capital outflows.

“Raising interest rates to stem capital outflows is an option but may choke domestic demand and slow recovery,” said Abdul.