COUNTRIES in Developing Asia including the Philippines must prioritize reforms that will ensure continued expansion of their economies amid slower global and regional growth, Asian Development Bank President Takehiko Nakao said at the annual meeting of the ADB’s Board of Governors in Baku, Azerbaijan.
“Despite the global financial crisis, developing Asia continues to be an important source of growth in the global economy,” Nakao said.
“However, the favorable conditions underpinning this growth may not prevail in coming years, so it’s important that countries prioritize reforms that will best position their economies for continuing expansion,” he said.
Finance ministers from China, Indonesia, Japan, and India who were at the meeting agreed that as developing Asia seeks inclusive and sustainable economic growth, countries are adapting their growth models to take advantage of new opportunities, to address emerging challenges and to realize the full potential of their economies.
As the “new normal” of slower global and regional growth appears to take hold, many countries in the region are reconsidering their growth strategies and carrying out structural reforms to enhance their economic potential, they said.
Across the region, the delegates said countries still needed to improve infrastructure, interconnectivity, and integration.
Resource-rich economies need to diversify into other sectors—such as tourism and information technology—to counter their exposure to commodity price shocks, they said.
With such diverse circumstances in the region, different keys are needed to unlock growth.
On the other hand, the panelists highlighted several areas needing attention: Reforming labor and land markets and rationalizing subsidies can remove inefficien cies.
Considerable investment is also needed to meet the region’s infrastructure requirements.
The finance ministers also emphasized that sustained economic growth under the new normal required a transition from labor intensive to knowledge intensive manufact uring.
For that to happen, it is crucial that governments foster research and development, innovation, and new market opportunities, as well as implement necessary structural reforms, they said.
Lastly, enhanced regional cooperation can boost intraregional trade and investment, thereby multiplying the dividends gained from domestic policies.
Countries that are already firmly established in the global value chains face the challenge of producing more sophisticated goods and services to become high income, the panelists said.
In its Asian Development Outlook (ADO) 2015 which was released in March, ADB projects that Developing Asia will grow at a steady 6.3 percent in 2015 and 2016, supported by a strengthening recovery in the major industrial economies and soft global commodity prices.
For the Philippines, the ADB Outlook forecasts the country’s gross domestic product (GDP) to grow by 6.4 percent in 2015 and by 6.3 percent in 2016.