Global crisis must not disrupt Asia's continuing transformation -
ADB
Developing Asia must build a firewall against possible escalation of
the global financial crisis, it must not veer from long-term structural
reforms already underway to further its economic transformation,
delegates at the Asian Development Bank (ADB) heard.
"While authorities continue to strengthen macro-economic resilience
to shocks, we also need to reinvigorate focus on the region's long-term
development goals," ADB President Haruhiko Kuroda said.
"The ultimate challenge is to continue transforming economies in a
way that promotes peoples' welfare and reduces poverty."
The region must update its growth model to accommodate a "new normal"
- prolonged restructuring in advanced economies - and surmount obstacles
to sustained and equitable growth in developing Asia, according to the
presented at the seminar.
Asia can weather a renewed financial crisis and weakened export
demand from developed markets, but long-term prosperity hinges on
relying more on domestic and regional markets as well as expanding ties
with Latin America and Africa, the report said.
Currently, the national focus is on containing crisis risks from
potential financial contagion and weaker trade.
Regionally, there is need for a strong, effective and adequately
resourced financial safety net to complement national and global
financial arrangements, the report said.
This year could prove crucial. Financial tensions in Europe could
escalate further.
And there remains concern over the fledgling economic recovery in the
United States.
The report urges policymakers to keep monetary policy flexible to
respond to extreme exchange rate volatility and use fiscal stimulus to
support domestic demand if needed.
The greatest challenge for policymakers is to manage these near-term
issues while maintaining Asia's successful, ongoing economic
transformation as a global growth engine.
Specifically, growing inequality between rich and poor will
eventually threaten the region's growth and stability, the report warns.
To counter this, Asia must invest more in human development and
social services to better equip its people to benefit from the
opportunities of rapid growth.
Key medium to long term measures to support this transformation
include: Rebalancing growth toward domestic sources- consumption and
investment; Strengthening finance, deepening markets, and fostering
financial inclusion; Improving the business and investment climate;
Preparing people for future jobs, upgrading industry, and
environmentally sound urban planning; Boosting intra-regional trade and
expanding "South-South" links; Deepening regional cooperation and
integration.
The global crisis is a wake-up call for Asia. The region's
policymakers not only have to boost Asia's resilience to external shocks
in the near-term but also tackle the risks posed by ongoing global
rebalancing and overall structural transformation.
The report notes that although authorities in the region have begun
addressing a number of these challenges, there is no room for
complacency and more needs to be done.
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