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p. 47 of 95 BACK | NEXT Message from the Chairman of the Board of Directors Members, Capital Stock and Voting Power The Record Abbreviations 2004 in Review: Board of Directors' Report Special Theme: The Changing Face of the Microfinance Industry: Building Financial Systems for the Poor Part 1: Institutional Effectiveness Part 2: Poverty Reduction Strategic Priorities Thematic Priorities Regional Perspectives East and Central Asia Azerbaijan China, People’s Republic of Kazakhstan Kyrgyz Republic Mongolia Tajikistan Turkmenistan Uzbekistan Mekong The Pacific South Asia Southeast Asia Part 3: Financial Statements: Management's Discussion and Analysis

Annual Report 2004 : Part 2: Poverty Reduction

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East and Central Asia

The region comprises Azerbaijan, People's Republic of China (PRC), Mongolia, and five Central Asian republics, namely Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan. It has significant natural resources including oil, natural gas, gold, and other metals, so its economic prospects are largely determined by international commodity prices. The PRC is a notable exception with a diversified manufacturing sector and a growing service sector. The region's total population of just over 1.4 billion and gross domestic product (GDP) of about $1.5 trillion make for a large market and offer considerable potential for trade, investment, and economic growth.

These eight economies span a vast geographical area with varying natural conditions. Many have harsh climatic conditions and are landlocked which imposes high economic transaction costs. In addition, all have a legacy of socialist economic policies though most have embarked on market-oriented reforms emphasizing macroeconomic stabilization, open trade, and private sector development. As a consequence, many are also developing new institutions including reformed judiciaries, private business associations, and new accounting standards.

The region is still in the midst of an economic boom that began in the late 1990s. GDP growth for the region as a whole was 8.5-9.5% in 2004 though country performance varied. High commodity prices (especially for oil, natural gas, and gold), increased production of key commodities, the inflow offoreign direct investment, and buoyant demand in export markets were responsible for this impressive performance. In the PRC, manufactured exports to international markets were sustained by technological upgrading and aggressive marketing driven by foreign direct investment and investments in infrastructure and skills.

ADB's efforts to promote cooperation in the region were strengthened by its Central Asia Regional Economic Cooperation (CAREC) program. With strong ownership from member countries and strategic alliances with development partners, CAREC has evolved into a full-fledged, extensive regional cooperation program in transport, energy, trade facilitation, and trade policy. CAREC also promotes private sector participation and greater cooperation with neighboring countries in the south, particularly Afghanistan. At the third ministerial conference in Astana, Kazakhstan in November,members reaffirmed their commitment to working together and agreed to prepare a comprehensive action plan up to 2007. ADB completed its regional cooperation strategy and program (RCSP) for CAREC member countries for 2004–2007.

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