Economists say Asia to lead global growth

MANILA, Philippines - Economists yesterday reiterated that global growth would continue to be dependent on Asia due to the economic uncertainties in the US as well as the sovereign debt crisis in Europe but cautioned officials and policy makers not to be complacent.

World-renowned professor and economist Jeffrey Sachs said in a press conference that the crisis in Europe and the US would continue to affect the economic growth in the Asia Pacific region.

“From Asia’s perspective that means slow growing markets, protectionist tendencies in the traditional markets and continuing risks of financial contagion,” Sachs told a press conference during the second day of the Asian Development Bank’s 45th annual meeting.

Sachs, director of the Earth Institute at Columbia University, pointed out that the US economy is still structurally imbalanced as it continued to pursue higher investments and exports while some countries in Europe continued to slip into recession.

“Europe needs to do a better job of getting past its financial crisis. It has not adequately addressed the banking crisis,” the economist said.

According to him, Asian countries including the Philippines should look for other growth drivers as major export markets particularly the US and other European countries would continue to experience difficulties.

“Asia will need to find outlets of growth that are different from export growth in the US and Europe,” Sachs said. Data showed that the percentage of Asia’s shipments to the US and European countries to its total exports plunged 24.5 percent in 2010 from 33 percent in 1999.

He pointed out that Asia could look at Africa that has over one billion population and is experiencing a strong growth of six percent.

“Africa, for example, is an export market because it is a continent of one billion that is now starting to grow at six percent a year and capable at growing eight percent a year,” he added.

ADB head for regional economic integration Iwan Azis said there is no room for complacency as the global crisis should serve as a wake-up call for Asia.

Azis cited the need to further deepen regional cooperation and integration.

 “There is no room for complacency and more needs to be done,” he added.

In a report titled “How Can Asia Respond to Global Economic Crisis and Transformation,” ADB stressed the need for the region to build a firewall against possible escalation of the global financial crisis by not veering from long-term structural reforms that are already underway and to further its economic transformation.

In a statement, ADB president Haruhiko Kuroda said the ultimate challenge for Asia is to continue transforming economies in a way that promotes peoples’ welfare and reduces poverty.

“While authorities continue to strengthen macroeconomic resilience to shocks, we also need to reinvigorate focus on the region’s long-term development goals,” Kuroda said.

According to the report, financial tensions in Europe could escalate further and there remains concern over the fledgling economic recovery in the US.

The report said that the crisis in Europe have had little impact on Asia so far but could spark a full blown economic crisis.