BALI, INDONESIA, 4 May 2009 - With the Asia and Pacific region hit hard by the global economic crisis, the region must rebalance growth, Asian Development Bank (ADB) President Haruhiko Kuroda today told the opening session of the 42nd Annual Meeting in Bali, Indonesia.
In a speech focusing on the global crisis, economic rebalancing and environmental sustainability, Mr. Kuroda stressed the importance of continuing to support the region's growth and poverty reduction efforts. The region's aggregate growth is expected to fall to 3.4% this year from record growth of 9.5% in 2007."Under our current projections, 60 million more people will remain trapped in poverty this year and yet another 100 million next year - an alarming setback to our vision of an Asia and Pacific free of poverty," Mr. Kuroda said, noting that the crisis and climate change are the two major threats to poverty reduction in the region.
The Annual Meeting follows a vote by its Board of Governors to triple ADB's capital base from $55 billion to $165 billion. The 200% increase will allow ADB to respond quickly and proactively to the immediate needs of its developing member countries while maintaining a focus on long-term development objectives.
ADB's response to the crisis features an additional $10 billion of ADB assistance in 2009-2010. The crisis assistance will include a new $3 billion Countercyclical Support Facility to disburse funds quickly and efficiently for urgent needs, and a front-loading of Asian Development Fund resources to provide $3.4 billion to ADF recipient countries this year. It also includes up to $1 billion to support trade financing, which is expected to generate up to $15 billion in trade support.
"With strong national and regional efforts, and a mild recovery expected in the global economy next year, developing Asia should bounce back to 6% growth in 2010," Mr. Kuroda said." Therefore, this should not be a time of despair. Our region continues to grow and will remain a touchstone of dynamism and hope, contributing substantially to global growth and poverty reduction."
In order to sustain growth over the long term, however, Asia will need to rebalance growth, placing more emphasis on domestic demand and consumption. In doing so, he said, "Asia can lead the way in charting a new, globally beneficial development course."
"While the challenges are huge, I believe the crisis is also an opportunity. An opportunity for our region - and the world - to fundamentally restructure our approach to development and bring about a more sustainable global balance," he said. "An opportunity for Asia to become not only a major source of goods and services, but also a major destination."
Along with the appropriate domestic policies, Asian countries need to work together to strengthen the investment climate, build a "seamless infrastructure" across the region, and promote regional trade. While warning strongly against protectionism, Mr. Kuroda said that "a stronger and more resilient regional economy, with multiple sources of growth, will also contribute to a stronger, more vibrant, and more resilient global economy."
This new development paradigm must also include a sharp focus on combating climate change. The region needs energy to grow, and its share of global carbon emissions could reach 40% by the year 2030." At a time when investment is desperately needed to stimulate economies, we need to target those investments to green development, including clean energy, to mitigate climate change," he said.
Last year, ADB provided nearly $1.7 billion for projects with clean energy components, and is financing a range of projects across the region. Mr. Kuroda noted that the Climate Change Fund established last year will be supplemented by a new $40 million Disaster Response Fund. ADB is also pursuing ways to facilitate rapid diffusion of new, low carbon technologies across the region, and has established an advisory panel of acclaimed climate change experts to guide the bank's efforts in the coming years.
Mr. Kuroda noted that ADB continues to improve its development effectiveness through better human resource management, knowledge sharing and management, more effective evaluation of projects, upgraded risk management capacity, alignment of its public and private sector operations, and updating of its social and environmental safeguard policies.
Discussions surrounding the ADB Annual Meeting will include issues such as economic diversification, environmental sustainability, private sector participation in infrastructure and regional integration, as well as the economic crisis.
"With Strategy 2020, the replenished Asian Development Fund, a substantial capital increase and our ongoing commitment to institutional effectiveness, ADB is well-positioned to play an expanded role in the region's future development," Mr. Kuroda said.