ADB President Calls for New Infrastructure Investment as Part of ADB’s Long-Term Strategy

YOKOHAMA, JAPAN (6 MAY 2017) — More investments in infrastructure are needed to support continued growth in Asia and the Pacific and combat climate change, Asian Development Bank (ADB) President Takehiko Nakao said in his opening address at the 50th Annual Meeting of ADB’s Board of Governors. Investment in infrastructure, he said, will remain a priority for ADB as the bank prepares a new long-term strategy to respond to rapid regional changes.

ADB’s Annual Meeting hosts about 6,000 government officials, academics, business officers, civil society representatives, and members of the media. Held in Yokohama, Japan, under the theme “Building Together the Prosperity of Asia,” the Annual Meeting is also a celebration of ADB’s 50 years of development work in Asia and the Pacific.

In his remarks, Mr. Nakao said ADB’s achievements over the past half century can be summarized as combining knowledge and finance, promoting good policies, and fostering regional cooperation and friendship.

Mr. Nakao said that ADB’s future direction will be led by Strategy 2030, ADB’s new long-term strategy that will map the best ways ADB can support Asia’s growth and address development challenges including poverty, climate change, urbanization, aging, and widening inequalities. ADB continues to hold consultations on the strategy with a wide range of stakeholders from around the region and in donor countries.

Investment in infrastructure will be an ADB priority under Strategy 2030, including enhanced support for infrastructure projects that incorporate advanced technologies. Mr. Nakao remarked that “Asia will need $1.7 trillion per year in investments in power, transport, telecommunications, and water through 2030.

Support for social sectors, especially health and education, is a second ADB priority area under Strategy 2030. For this Mr. Nakao stated that ADB “will support universal healthcare systems and cross-border initiatives to combat communicable diseases such as malaria, tuberculosis, and HIV.”

Strategy 2030 will also prioritize support for gender equality. Gender is a cross-cutting issue that influences all aspects of society and economic development. According to Mr. Nakao, ADB will “design projects that help women and girls secure higher skills, better health, more jobs, and a larger voice in decision-making.

ADB will upgrade efforts to mobilize private resources for development, including through public–private partnerships under the emerging new long-term strategy. “ADB is supporting an increasing number of private sector projects in education, health, and agriculture,” said Mr. Nakao. “Funding micro-, small-, and medium-sized enterprises through local banks will remain a priority.”

Finally, Mr. Nakao stressed the need to continue to reform ADB as part of Strategy 2030. Among the reforms, he said ADB will “strengthen its sector and thematic expertise, enhance staff capacity, and streamline procedures.” Mr. Nakao added that the institution will deepen its collaboration with civil society, academia, the private sector, and local governments.

Mr. Nakao highlighted ADB’s progress in 2016. He noted that total ADB operations last year, including cofinancing and technical assistance, reached $31.7 billion. ADB’s loan and grant approvals reached a record high of $17.5 billion, a 9% increase from the previous year. Climate finance reached $3.7 billion, up from $2.6 billion in 2015. Cofinancing with public and private partners increased to $13.9 billion. This includes ADB’s first two cofinanced projects with the Asian Infrastructure Investment Bank for roads in Pakistan and a natural gas project in Bangladesh.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB is celebrating 50 years of development partnership in the region. It is owned by 67 members—48 from the region.

Source: ADB

Expanding Economies in Asia Deliver 60% of Global Growth

HONG KONG, CHINA (6 April 2017) — Growth is picking up in two-thirds of economies in developing Asia, supported by higher external demand, rebounding global commodity prices, and domestic reforms, making the region the largest single contributor to global growth at 60%, says a new Asian Development Bank (ADB) report.

In its new Asian Development Outlook (ADO) 2017, ADB forecasts gross domestic product (GDP) growth in Asia and the Pacific to reach 5.7% in 2017 and 2018, a slight deceleration from the 5.8% registered in 2016. ADO is ADB’s flagship annual economic publication.

Developing Asia continues to drive the global economy even as the region adjusts to a more consumption-driven economy in the People’s Republic of China (PRC) and looming global risks,” said Yasuyuki Sawada, ADB’s Chief Economist. “While uncertain policy changes in advanced economies do pose a risk to the outlook, we feel that most economies are well positioned to weather potential short-term shocks.

Industrial economies are gathering growth momentum, with the US, euro area, and Japan expected to collectively grow by 1.9% in 2017 and 2018. Rising consumer and business confidence and a declining unemployment rate have fueled US growth, but uncertainty over future economic policies may test confidence. The euro area continues to strengthen, but its outlook is somewhat clouded by uncertainties such as Brexit. Meanwhile, Japan remains dependent on its ability to maintain export growth to continue its expansion.

The PRC’s growth continues to moderate as the government implements measures to transition the economy to a more consumption-driven model. Overall output is expected to slow to 6.5% in 2017 and 6.2% in 2018, down from 2016’s 6.7%. Efforts to maintain financial and fiscal stability will continue to be a modest drag on growth going forward, but continued structural reform will help to maintain growth in the government’s target range.

South Asia remains the fastest growing of all subregions, with growth reaching 7% in 2017 and 7.2% in 2018. In India, the subregion’s largest economy, growth is expected to pick up to 7.4% in fiscal year (FY) 2017 and 7.6% in FY2018, following the 7.1% registered last FY. The impact of the demonetization of high-value banknotes is dissipating as the replacement banknotes enter circulation. Stronger consumption and fiscal reforms are also expected to improve business confidence and investment prospects in the country.

Overall growth in Southeast Asia is forecast to accelerate further with nearly all economies in the region showing an upward trend. The region will grow 4.8% in 2017 and 5% in 2018, from the 4.7% recorded last year. Commodity producers such as Malaysia, Viet Nam, and Indonesia will be boosted by the recovery of global food and fuel prices.

Growth in Central Asia is expected to reach 3.1% in 2017 and 3.5% in 2018, on the back of rising commodity prices and increased exports, albeit with large heterogeneity among countries in the region.  Meanwhile, countries in the Pacific will reach 2.9% and 3.3% growth over the next 2 years as the region’s largest economy, Papua New Guinea, stabilizes following a fiscal crunch and Fiji and Vanuatu recover from natural disasters.

Regional consumer price inflation is projected to accelerate to 3% in 2017 and 3.2% in 2018 from the 2.5% registered in 2016 on the back of stronger consumer demand and increasingly rising global commodity prices. Inflation projections for the next 2 years, however, are well below the 10-year regional average of 3.9%.

Risks to the outlook include higher US interest rates, which will accelerate capital outflows, although this risk is mitigated to some degree by abundant liquidity throughout the region. The effects of US monetary policy tightening are likely to materialize only gradually, giving governments in Asia and the Pacific time to prepare adequately. Economies with flexible exchange rates may experience deeper currency depreciation and subsequent higher inflation, while managed currencies will tend to forfeit export price competitiveness.

On the domestic front, rising household debt in some Asian economies is a rising risk. Authorities can counter this risk through prudent macroprudential policies, such as requiring tighter debt-to-income ratios for loans. Authorities may also have to intervene more decisively in housing markets to cool speculative demand and head off asset bubbles.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB is celebrating 50 years of development partnership in the region. It is owned by 67 members—48 from the region.

 Source: ADB