ADB urges Asian nations to be more resilient to external shocks

A number of Asian countries still face many challenges and need to take measures to become resilient to external vulnerability and shocks, said Wencai Zhang, Vice-President (Operations), Asian Development Bank (ADB).

While these countries enjoy a high growth rate, many still face challenges such as abject poverty, rising inequality, difficulty in diversifying the economy and promoting structural reforms, he told BusinessLine.

According to him, these countries need to work out strategies to stimulate private investment and foreign capital.

“They need to do many things — develop the capital markets right, they need to develop their business environment, the ease of doing business is still not very good,” he said.

Zhang, who was in the Capital for the South Asia Subregional Economic Cooperation (SASEC) programme, noted that the region still relies to a large extent on the US and European economies. The ADB serves as the SASEC Secretariat.

The seven-member group can also become more resilient from external vulnerabilities through the SASEC programme that focuses on development of inter-regional cooperation and trade. However, this would not be an alternative to the US and European countries that are seeing a rise in protectionist policies, he said.

He also said that further policies of the Trump administration in the US have to be seen and countries in Asia may then talk to the US government to promote a favourable trade environment.

“Some countries have some concern but in general most countries support trade facilitation. We have to see how the US policy impacts countries such as India and China,” he said.

Regarding India, he said that the country has the potential to play a significant role in the global and regional trade dialogue.

“Given the size of India’s market and its increasing role at the regional and global level, many countries want to expand trade with India,” he said, adding that and the country’s young workforce can help it turn into an exporter of manufactured goods.

He said that India, being the largest country in the region, will benefit the most from enhancing trade as it will also facilitate more regional cooperation.

“It will generate more benefits in the neighbouring countries and there will be more inter-regional trade.

“At present, this is very limited as compared to other parts of the region such as ASEAN, East Asia,” he said.

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