NEW YORK—Despite the financial turmoil threatening the global economy, Asian Development Bank President Haruhiko Kuroda believes that Asia is prepared to take the challenge because the region "earned its lessons well from the crisis of a decade ago."
Kuroda delivered a speech at the CEO Forum organized by the Asia Society last Nov. 7 and explained that despite the Asian region’s resiliency to external shocks, a slowdown in regional growth now appears inevitable, specially if the heightened financial stress persists.
"Any tempering of growth will delay the region’s quest to improve the living standards for our populations—particularly the poor," Kuroda said.
Kuroda also explained that despite the emergency measures taken to reduce the severity and duration of the crisis, the damage is still considerable and further deterioration is possible.
"Volatile equity and currency markets—from New York to Tokyo—are just one indication of continuing uncertainty. New trade-related data, reports on unemployment, and pared-back industrial and manufacturing orders are all signs that the global slowdown could turn into a global recession," Kuroda warned.
Recognizing the fact that there are very difficult challenges ahead for Asia, the ADB President said that steps must be in place to prepare for further slowdown next year, given the rapidly deteriorating global economic situation.
Kuroda also discussed the impact of the global financial crisis on Asia and suggested that developing Asia "needs to take appropriate fiscal and monetary responses to address the downturn."
Among other things, Kuroda said that existing regional mechanisms must be strengthened and Asian countries must explore ways to mobilize adequate financing to fund priority development needs.
"With plunging equity prices and a timid credit market, many Asian companies will struggle to access capital for expansion and new investments, and to refinance existing debt," he added.
All things considered, Kuroda said he remains optimistic that developing Asia can weather the storm of this global financial crisis and national policies must need to focus on mitigating the impact of this economic slowdown.
"A range of indicators also point to a healthier corporate sector in Asia. The result is that a full-fledged financial crisis in the region is unlikely," he said.
Kuroda concluded his remarks by encouraging national and regional collaboration in Asia, making sure that developing Asia has sufficient access to financing to fund the region’s priority development expenditures.
"Ultimately, a global crisis requires a global solution. Aside from the immediate short-term actions to stabilize finance, we need a longer-term plan for reforming the regulatory and institutional framework for the world’s financial systems," he said.
(Published November 14, 2008 P.A1 LAMDWK)
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