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Opening Remarks on How Can Asia Respond to Global Economic Crisis and Transformation?
Opening Remarks by ADB President Haruhiko Kuroda on How Can Asia Respond to Global Economic Crisis and Transformation? at the Governors' Seminar at the 45th Annual Meeting
Your Excellencies, ladies, and gentlemen:
It is indeed an honor to welcome all of you to this Governors Seminar on a topic of central importance to us all. Asia's economic transformation over the past several decades has been as inspirational as it has been rapid. The drive to open up economies has brought sustained growth, new jobs, rising incomes, and huge advances in poverty reduction. Yet today we face myriad of new challenges.
For one, we must adapt to a global economic architecture that has been dramatically altered by the global financial crisis of 2008. While a resilient developing Asia recovered quickly from the crisis, structural weaknesses in advanced economies mean their recovery will take time. So Asia must adapt to this "new normal."
Asia's policymakers therefore must be prepared to handle short-term risks—including the possibility of renewed crisis and contagion—without disrupting the longer-term process of economic transformation. Structural reforms already underway need to be deepened and accelerated.
For crisis prevention, strong regional financial safety nets—to complement national and global arrangements—are essential. The ASEAN+3 has made significant progress in this respect through the Chiang Mai Initiative Multilateralization and the establishment of its surveillance and monitoring arm—the ASEAN+3 Macroeconomic and Research Office, or AMRO. This is the foundation of a viable regional cooperative effort, and an example for other subregions to develop similar arrangements in developing Asia.
While authorities continue to strengthen macroeconomic resilience to shocks, we also need to reinvigorate focus on the region's long-term development goals. Asia has already begun to rebalance its sources of growth more toward domestic and regional markets, while still maintaining the export model that has been so good for the region. As supply chains and production networks deepen further, markets will expand both intra-regionally and inter-regionally, resulting in greater South-South cooperation and the ability to tap into trade and investment opportunities in Latin America and Africa.
Asia has indeed re-emerged as an engine of global growth. To sustain this momentum into the future, growth must be made increasingly inclusive and far more equitable. It must be environmentally sustainable as well, particularly as vast amounts of resources are needed for the region's continued development, income growth, and poverty reduction. Unless these challenges are addressed expeditiously and firmly, the sustainability of future growth will be at risk. In this regard, I specifically want to stress the need for an optimal mix of policies that will help meet both environmental and socio-economic objectives. Failure in resolving challenges on either front will have an adverse impact on the other.
This seminar is designed to stir debate. As we discuss these fundamental issues, let us begin with a framework where we act regionally but think globally. In this context, national priorities must also be met if regionalism is to succeed.
So allow me to pose a few questions:
- Crises by nature are wake-up calls. Does developing Asia have adequate resilience to potential external shocks?
- Are we sufficiently prepared to take advantage of the opportunities and deal with the risks that global rebalancing presents?
- Asia's macroeconomic response through the provision of stimulus was vital in bringing about rapid recovery. But are we doing enough to ensure this happens in a way that promotes peoples' welfare? Rapid growth has been associated with rapid increases in income for some, while creating inequity in many countries. How do we ensure that the fruits of future growth are more fairly and equitabily distributed so as to prevent polarization?
- And finally, with the center of economic gravity shifting to Asia, is there need for a new "development paradigm"? In what areas can developing Asia lead?
For policymakers, it is always necessary to fight fires when they appear. But this must be done without disrupting the long-term goals of sustainable, inclusive, and environmentally sound growth. The ultimate challenge is to continue transforming economies in a way that promotes peoples' welfare and reduces poverty.
We have an outstanding panel with us to lead this critical seminar. And I very much look forward to a vibrant discussion.