MANILA, PHILIPPINES - Increased assistance for trade-led development is vital for Asia and the world to recover from the latest economic crisis and ensure long-term growth, Asian Development Bank (ADB) President Haruhiko Kuroda said Monday at the Second Global Review of Aid for Trade in Geneva, Switzerland.
At the same time, it is "critically important" that countries refrain from taking protectionist measures to try to insulate themselves from the effects of falling global demand, he said.
The gathering brought together Pascal Lamy, Director-General of the World Trade Organization, Robert Zoellick, President of the World Bank, and Dominique Strauss-Kahn, Managing Director of the International Monetary Fund, with the heads of various multilateral development banks and other top trade and development officials to discuss progress on Aid for Trade since the first review in November 2007.
Aid for Trade, conceived in December 2005, is aimed at helping the least-developed countries around the world put in place the policies, infrastructure and skills necessary to bolster trade which, in turn, boosts economic growth and helps to reduce poverty.
The Asia and Pacific region's trade performance is mixed. While some countries are integrated into global business networks, the region's 22 least-developed and smaller economies still account for just 0.3% of world exports, a level that has barely changed in the last 25 years.
The global economic crisis has worsened the situation, with the sharp drop in the region's exports expected to cause aggregate growth to decline to around 3.4 % this year. While growth is anticipated to pick up to 6% in 2010, lower-income countries and small states are likely to lag behind and rising poverty remains a major concern when the global economy recovers.
"Rebalancing growth toward greater domestic and regional demand is an important key to the region's recovery. This will foster increased intra-regional trade, help the region recover faster and strengthen Asia's approach to open regionalism. Aid for Trade is also vital for economic recovery and for long-term development and structural change," Mr. Kuroda said.
ADB continues to support increased trade within the Asia and Pacific region. In the Greater Mekong Subregion (GMS), for example, it has financed roads across the six-country region and also standardized border regulations. ADB also earlier this year expanded its Trade Finance Facilitation Program from $150 million to $1 billion. The program, which extends loans and guarantees to support trade in frontier markets, could generate $15 billion in trade finance through 2013.