Close cooperation needed to counter geopolitical risks

Manila, Philippines: Shifting relations between Asian countries and the changing global economy mean that Asia needs to strengthen its economic cooperation, said the Asian Development Bank's (ADB) Asian Economic Integration Monitor released last week.

"Asia needs stronger cooperation now more than ever," said Head of ADB's Office of Regional Economic Integration, Iwan J. Azis.

"Regional trade and financial integration have ratcheted up over the past decade and closer cooperation is needed to counter geopolitical risks while surveillance and financial safety nets can address contagion," he said.

Asia's intraregional trade share has risen to about 54% in recent years and into early 2013, with trade between subregions rising, particularly for Central Asia and the Pacific.

Asia-Pacific's trade share with other emerging markets outside the region continues to rise while the trade share with the US and Japan continues to decline.

Financial integration continues to deepen too, with an increase in cross-border equity and debt holdings and foreign direct investment.

Intraregional bank credit flows - particularly from Japan and Australia to other Asian countries - is emerging as an important source of stable external financing.

South East Asian nations are attracting more foreign direct investment from within the region and from East Asia, strengthening production networks as the region gears up for the setting up of the ASEAN Economic Community in 2015.