ADB president's mantra for meeting crisis head-on

Decisive action coupled with greater reliance on domestic demand will lead Asia out of the current downturn, ADB president Haruhiko Kuroda told a seminar audience at ADB's 42nd annual meeting in Bali.

The Governor's Seminar on "The Global Financial Turmoil and Implications for Asia" discussed how developing Asia's economies have been affected by the crisis and how they can contribute to a return to global financial stability and economic growth.

In his introductory remarks at the seminar, Kuroda noted that Asian governments have responded quickly to the crisis with appropriate financial, monetary and fiscal policies and so far the impact on financial stability has been limited. However, he warned that the "longer or deeper" the crisis becomes the greater the risk to the region's financial sector.

"This grave situation needs more vigorous and concerted efforts by all concerned to bring growth in the region back to its higher trajectory and support the global recovery," he said.

A recent ADB report forecast that developing Asia's economies will experience a sharp slowdown in growth as the full impact of the severe recession in industrialized economies is transmitted to emerging markets. The report, Asian Development Outlook 2009, released 31 March, forecast that economic growth in developing Asia will slide to just 3.4 per cent in 2009, down from 6.3 per cent last year and a record 9.5 per cent in 2007. If the global economy experiences a mild recovery next year, the outlook for the region will improve to 6 per cent in 2010.

Sri Mulyani Indrawati, Minister of Finance and ADB Governor for Indonesia, warned that a continued reversal in capital inflows could exert significant macroeconomic pressure on the region. Foreign capital took flight immediately following the onset of financial turmoil last September. Asia's stock market indexes fell even more sharply than advanced markets and currencies tumbled, placing significant pressure on country's balance of payments. Sri Mulyani said these pressures are one of the region's 'biggest challenges.'

'Kuroda said that the pronounced impact of the current global downturn on the region's growth underlined the risk of excessive dependence on external demand. He said developing Asia should rebalance its growth to get through the global crisis and boost its resilience to large external shocks in the long run.

$120-billion fund approved

BALI: Asian nations on Sunday agreed on the make-up of a $120-billion regional liquidity fund designed to counter the global economic crisis. Finance ministers from the 10-member ASEAN, Japan, China and South Korea approved the key components of the scheme, including individual country contributions, Indonesian finance minister Mulyani Indrawati said. Japan and China each committed $38.4 billion, or 32 per cent, to the fund, while South Korea would provide $19.2 billion. The reminder would come from the 10 ASEAN member countries. Four of ASEAN's richest members -- Malaysia, Singapore, Indonesia and Thailand -- would each contribute four per cent, or $4.7 billion, to the regional fund, dubbed the Chiang Mai Initiative. The Philippines committed to 3.1 per cent while Vietnam would contribute slightly lower than one per cent. The other members of ASEAN are Brunei, Laos, Myanmar and Cambodia. "This is very good news," ASEAN secretary general Surin Pitsuwansaid. -- DPA

Asia must preserve MDG gains

KATHMANDU: The economic crisis threatens to reverse decades of progress in poverty reduction and governments must do what they can to ensure that gains made in recent years are not lost because of the slowdown, a seminar audience heard today at the Asian Development Bank's (ADB) 42nd annula meeting in Bali. The seminar, titled 'Towards Inclusive Growth: Achieving the MDGs in Asia and the Pacific," saw policymakers, economists and development agency officials discussing the impacts of the crisis on MDG progress, andthe actions needed to protect and include vulnerable groups once economies in the region rebound. 2009 is past the halfway mark to 2015, the target year for accomplishing the eight MDGs. Asia has made strong progress on poverty reduction, with many countries expected to reach the target of cutting extreme poverty in half by 2015.