Asia to lead world economies amid challenges - ADB

Kyodo News

Posted at Jan 13 2014 07:06 PM | Updated as of Jan 14 2014 03:06 AM

HONG KONG - The Asian Development Bank said Monday that Asia's role in leading the world economy will continue to grow in the coming decades despite short-term challenges.

ADB President Takehiko Nakao said Asia accounted for about 20 percent of the global economy in 1990 and today accounts for nearly 30 percent, according to an ADB study, and by 2050 it could account for more than half of world production.

"Asia must face new challenges, but I remain positive on the region's prospects in the coming decades," Nakao said during the two-day annual Asian Financial Forum held here.

The tapering off of the U.S. Federal Reserve's quantitative easing "has begun and this means tighter global liquidity conditions," he said.

"Despite moderation (in the Asia region), growth remains robust by anyone's standard and this moderation is anchoring alongside the critical structural reform needed to strengthen the sustainability of robust growth in a more equitable and environmentally sound fashion," he said.

Nakao highlighted the importance of political stability, infrastructure building and endorsement of the rule of law for poorer countries, such as Cambodia, Laos and Myanmar, to catch up with the more advanced economies.

While growth in mainland China has seen moderation after three decades of close to double-digit growth partly due to rising wages, Nakao said policy directives to boost private consumption and investment following the Third Plenary Session of the Communist Party of China in November will help alleviate the slowdown.

"Of course, there are so many challenges for the Chinese economy, like how the financial system can be regulated better, and how the high leverage of local governments can be addressed, pollution and so on. But I am a little bit on the optimistic side," he said.

After meeting last week in Beijing with Chinese Vice Premier Zhang Gaoli, Nakao said he came away impressed by the "very comprehensive, very deep approach to market-oriented reform."

The ADB last month raised China's gross domestic product growth forecast for 2013 to 7.7 percent from an earlier 7.6 percent, citing an increase in infrastructure investments in the third quarter of the year.

It left the growth forecast unchanged at 6 percent for developing Asia excluding Japan in 2013.

Hong Kong, meanwhile, is estimated to have growth by 3.2 percent for 2013, and by projection 3.8 percent in 2014.

The two-day forum, bringing together some 2,400 business leaders and finance officials from around the world including former U.S. Treasury Secretary Timothy Geithner, is in its seventh year and will run through Tuesday.