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ADB: Asia growth will drop to 3.4 percent this year

04 May 2009 10:15 (UTC +04:00)

Bakuâ€“ APA-Economics. Asia must boost domestic consumption and end its dependence on exports as external demand plunges in the world economic slump, the Asian Development Bank said Sunday.
The call was echoed by regional finance ministers gathered at the ADB’s annual meeting on the Indonesian resort island of Bali, where strategies for overcoming the worst financial crisis in 70 years took centre stage..
ADB President Haruhiko Kuroda said Asia’s main export markets had experienced a "massive contraction in demand" since the implosion of the US mortgage market triggered the global banking crisis last year.
Asian governments have responded by slashing benchmark lending rates and spending billions of dollars to stimulate their economies.
But 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 economic growth in developing Asia will slide to just 3.4 percent in 2009, down from 6.3 percent last year and a record 9.5 percent in 2007.
The bank plans to increase its overall lending assistance by more than 10 billion dollars in 2009 and 2010, including three billion to support more fiscal stimulus spending.
That would bring total ADB assistance during the period to about 32 billion dollars, compared with about 22 billion dollars in 2007 and 2008, it said.
The increased lending is possible thanks to a decision by member states last week to triple the ADB’s capital base, from 55 billion dollars to 165 billion.
The ADB says the economic crisis has kept some 60 million Asians in extreme poverty who otherwise would have been able to improve their standards of living.
The ADB has said growth could lift to around six percent in developing Asia next year.
The bank focuses on lending for poverty alleviation in Asian developing nations and has 67 member countries including 19 from outside Asia.