The Asian Development Bank (ADB) President Haruhiko Kuroda told ASEAN, East Asian and South Asian officials at the ADB’s annual meeting in Bali, Indonesia that Asia must boost domestic consumption and end its dependence on exports as external demand plunges in the world economic slump.
ADB President Haruhiko Kuroda said Asia's main export markets had experienced a "massive contraction in demand" since the global banking crisis last year.
The flow-on effect had seen interest rates on bonds spike higher and Asian currencies depreciate with the flight of foreign capital out of emerging markets.
Although Asian governments have embarked on economic stimulus packages, Kuroda said such measures would not be enough without structural reform to end the region's dependency on demand from rich countries.
Over the longer term, developing Asia is starting the process of rebalancing growth from excessive dependence on external demand to greater resilience on both consumption and investment," he said.
"Already there are signs that domestic consumption is remaining strong in Asia and may well lead the way out of this downturn."
The ADB is predicting growth of 3.4 percent for the region this year, compared with more than 9 percent in 2007.
The bank plans to increase its overall lending assistance by more than 10 billion dollars in 2009 and 2010, bringing total ADB assistance during the period to about 32 billion dollars, compared with about 22 billion dollars in 2007 and 2008.
Some critics said the move to triple ADB’s capital base from 55 billion dollars to 165 billion dollars was unnecessary given the massive reserves of member countries such as China and India, while others said it meant a "dangerous" expansion of lending by a bank with a record of weak oversight.
AFP, Asia must retool to boost domestic demand: ADB, 3 May 2009, http://www.google.com/hostednews/afp/article/ALeqM5gGvXWlQBhFg0PNNWfJeev...
BBC News, Asia 'must cut export dependency’, 3 May 2009, http://news.bbc.co.uk/2/hi/business/8031456.stm