IMF Survey: Post-Crisis, Developing Asia Looks to Harness Growth
March 19, 2010
- Talks on reducing poverty, raising growth
- "Verging-on-emerging market" challenges
- Populations set to rise into middle class
Boosting infrastructure spending, strengthening growth, and improving competitiveness are expected to be key themes at a meeting in Hanoi, Vietnam, gathering together government officials, non-governmental organizations, international financial institutions, and academics from around Asia.
Developing Asia Conference
The subject of how best to boost growth, and the impact of the recent global crisis in developing countries will be raised during the a one-day conference on March 22 organized by the State Bank of Vietnam and the International Monetary Fund, under the theme of “Post-crisis growth and poverty reduction in developing Asia”.
“Asia has the largest number of poor people in the world. These people are becoming richer and richer thanks to their enterprising efforts, government policies, various business opportunities and their hard work. We would like to see what kind of policy options such countries need to adopt so that this process from low-income status, to middle-income status is realized,” said Masato Miyazaki, the IMF’s mission chief for Vietnam and one of the organizers of the conference.
Emerging from the crisis
IMF economists predict that emerging Asia will grow by 8 ½ percent in 2010, led by China and India. Globally, the continent is also leading the rebound from the global crisis.
Developing Asia, which comprises the poorer countries in the region, weathered the crisis relatively well, due to the adoption of stimulative policies and continued robust remittance inflows. But it was also less impacted by the global downturn because of its limited integration into the global economy, weaker reliance on private portfolio flows, and the types of manufactured goods these countries produce, which were less affected by the slump.
Still, the downturn had a very real and negative impact on the lives of many of the poor on the continent. Before the crisis, poverty in Asia had fallen dramatically, but the recent global slump has pushed an estimated 14 million Asians back into poverty, with people living in agricultural areas, facing particular hardship.
The First Deputy Managing Director of the IMF, John Lipsky, who is giving the opening address at the conference, is expected to highlight the effect of the global slump on the poorest and most vulnerable. He will tell delegates that even small economic dislocations in developing countries can provoke considerable suffering.
Keys to continued growth
Following the crisis, developing Asian countries are well-positioned to take advantage of surging inter-regional trade. But key policy challenges need to be addressed if these “verging-on-emerging” economies are to make the leap to the next stage of development.
• Macroeconomic stability: In some countries fiscal deficits and public debt are large, credit growth and inflation are high, and international reserves are low. It is important to rebuild policy buffers and further improve financial sector soundness.
• Structural reforms: should be prioritized to help boost competitiveness and facilitate developing Asia’s entry into the regional and global trade network. Developing financial markets would ensure better allocation of capital, providing savings vehicles to raise household income.
• Investment in infrastructure: Investment is needed to fill huge infrastructure gaps in Asia, in areas such as transport, energy and communications. This would boost productive potential but also help fight poverty.
• Social safety nets: need to be strengthened across the board to protect the poor and vulnerable and to raise access to basic public services, including health care.
The danger posed to the developing world by climate change will also be highlighted during the conference. Southeast Asia in particular, with its long coastlines and concentrations of people and activity in these areas, is especially vulnerable to the havoc which could be wreaked by climate change. Without action, it is predicted that the region could lose the equivalent of 6 ¾ percent of GDP each year by 2100, more than twice the global average loss.
The IMF has recently announced a proposal for a multi-billion dollar “Green Fund” to marshal resources to help developing countries overcome the challenge of climate change.
At the end of the conference, participants will gather for a two-hour roundtable, involving panelists Punchi Bandara Jayasundera, Financial Secretary of Sri Lanka; Surendra Pandey, Nepal’s Minister of Finance, Mohammad Allah Malik Kazemi, Senior Consultant and Advisor to the Governor of the Bangladesh Bank, and Maria Almasara Cyd Amador, Assistant Governor Bangko Sentral ng Pilipinas. They will exchange views on policies for enhancing growth and reducing poverty, and will draw lessons from the crisis for developing Asian countries.
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