Special Report: Global Financial Crisis
By Zhou Erjie, Xu Lingui, Wang Jingzhong
BALI, Indonesia, May 5 (Xinhua) -- Building up the demand of Asian countries, both domestic and intra-regional, is crucial to help Asia recover more quickly than the rest of the world, said Jong-Wha Lee, acting Chief Economist of the Asian Development Bank(ADB) in an interview with Xinhua.
"Asian countries should do at least two things. One is to strengthen domestic demand and the other is to make big the regional demand, because this is very difficult time to rely on external demand for their source of growth," said Jong-Wha Lee on the sidelines of ADB's annual meeting ended Tuesday in Bali, Indonesia.
Export-reliant Asian economies are being hit hard by collapsing demand in the United States and Europe, as recession-hit consumers and companies cut back on spending.
ADB estimates that the crisis will keep more than 60 million people in developing Asia trapped in absolute poverty this year, and nearly 100 million more in 2010.
"Fortunately, Asian countries have more room to cut the policy rate, if the situation becomes deteriorating. Asian countries mobilize fiscal stimulus packages very actively, aggressively and very responsibly. So fiscal stimulus packages, especially like those adopted by China, (South) Korea and Japan would help to strengthen domestic demand," he said.
"China has been doing very well. Credit growth still maintains double-digit and actually is increasing. Fiscal stimulus was coming in," said Lee. "This time, China responded very quickly, earlier than other Asian countries and that's why we see some positive signs coming earlier than other countries."
In terms of boosting intra-regional demand, the economist called for cooperative efforts to do it simultaneously, mobilizing resources to build the regional demand.
"We need to trade more, we need to provide certain regional mechanism so as to strengthen trade and investment and financial transactions, like the CMIM (Chiang Mai Initiative Multilateralization) and Asian bond market. It will all do help to strengthen regional demand," he said.
China's domestic market is important to the region, Lee said, as Association of Southeast Asia Nations (ASEAN) rely on China for more than 30 percent of their exports and the most important trading partner of Japan and India is both China.
"Our forecast for the Asian developing counties as a whole for 2009 is 3.4 percent. This is a significant slowdown from the 6.3 percent in 2008, but Asian countries will show a mild recovery in 2010, the growth rate will be more than 6 percent," Lee said.
"I think Asian economy is very close to the bottom. The big question is that how long they would stay at the bottom, it would be a long and hard process to get to recovery," he added.
The economist also contended that Asia's voices in the global institutions should be increased.
"Asia's economy has increased significantly. Now more than half of the (world's) population is living in Asia. One third of GDP in terms of Purchasing Power Parity (PPP) are produced in Asia, including Japan. But if you look at the global institutions, how much can you reflect Asia's voice and Asia's participation?" he asked.
"As much as our economic size becomes increased, our influence should also increase. That does not mean we need to have certain power, it also comes together with our responsibility. We try to be responsible to the global institutions," Lee said.
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