Tue, May 05, 2009 page11

• ADB sees ‘mild recovery’ with 6% growth next year

  BOOST Asian Development Bank president Kuroda said the bank would increase its lending assistance to poor countries by more than US$10 billion this year and next

  • AFP
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  The Asian Development Bank (ADB) yesterday called for a fundamental “rebalancing” of regional economies in response to the global crisis, while predicting a “mild recovery” next year.

  Opening the ADB’s board of governors annual meeting in Bali, president Haruhiko Kuroda said the region would record only 3.4 percent growth this year but could expect a rebound to around 6 percent growth next year.

  “With strong national and regional efforts and a mild recovery expected in the global economy next year, developing Asia and the Pacific should bounce back to about 6.0 percent growth in 2010,” he said. “These are positive signs, therefore this should not be a time of despair.”

  He outlined a huge expansion in the ADB’s lending plans to help stimulate developing economies across Asia, after shareholders agreed last week to triple the bank’s capital base in response to the global downturn.

  The bank will increase its overall lending assistance to the region’s poorest countries by more than US$10 billion this year and next year, including US$3 billion to meet “urgent needs stemming from the crisis,” Kuroda said.

  Some of that lending would aim to help Asian economies adjust to plunging demand for their exports to markets such as the US.

  “The transfer of savings from one part of the world to another worked well when advanced economies could absorb production from developing economies, but the current state of the global economy suggests that era has passed,” Kuroda said. “By rebalancing export-driven growth with a greater reliance on domestic demand and consumption, Asia can lead the way in charting a new, globally beneficial development course.”

  Interest rate cuts and government spending will help spur the recovery in Asia, where banks are not suffering problems on the same scale as their US and European peers, the IMF has said.

  Economic data have raised hopes that China could be the first major economy to disentangle itself from the worldwide crisis, providing new growth momentum for its trading partners in the region.

  In India, expectations of a healthy harvest fueling consumer spending has driven India’s benchmark SENSEX share index to a six-month high as fund managers switch their country ratings to “overweight” from “underweight.”

  Kuroda also called for changes in the global financial architecture to give voice to the aspirations of Asia, where powerhouses like China and India are emerging as rivals to US domination of the world economy.

  Ten Asian countries plus China, Japan and South Korea agreed on Sunday to set up a US$120 billion regional emergency fund to help Asian economies out of crises.

  Indonesian President Susilo Bambang Yudhoyono said “precautionary mechanisms” like the regional liquidity fund were necessary to “ensure foreign exchange stability and confidence” in crisis-hit local currencies.

  He said Indonesia, Southeast Asia’s biggest economy, had learned from the economic turmoil that swept Asia in the late 1990s and had launched “sweeping reforms” that helped it avoid recession in the current downturn.
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