Asia may emerge from the crisis faster, says ADB

Asia may emerge from the crisis faster, says ADB
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First Published: Fri, Apr 10 2009. 01 15 AM IST
Updated: Fri, Apr 10 2009. 12 33 PM IST
Tokyo: Asian economies may be the first to emerge from the global crisis because the region’s banks hold fewer toxic assets than lenders elsewhere, said Zhao Xiaoyu, vice-president of the Asian Development Bank (ADB).
“Asia will eventually emerge out of this crisis earlier than others” also because cooperation in the region has improved since the 1997 Asian financial crisis, Zhao said in Tokyo on Wednesday. “I’m pretty confident of that.”
Financial institutions worldwide have incurred $1.3 trillion (about Rs65 trillion) in losses and writedowns in the wake of the worst financial meltdown since the Great Depression. The Group of Twenty nations met in London in April promising to take “all necessary actions” to restore global credit.
Losses and writedowns on bad debts held by banks and insurers could swell to $4 trillion, the International Monetary Fund will say in new forecasts, the London-based Times newspaper reported on 6 April, without saying where it got the information. Most of those are from US institutions, according to the report.
Zhao said European and American financial institutions are selling valuable Asian assets to get hold of cash and improve their balance sheets.
“In the long run, that’s the wrong strategy,” Zhao said. “But in the short run, that’s something they must do.”
ADB predicts that economies in Asia excluding Japan will grow 3.4% in 2009 and 6% in 2010.
Zhao said improving trade finance is one of the keys to an early recovery in the region.
The financial crisis has prompted banks around the world to reduce lending to emerging markets and cut credit lines to importers and exporters.
“The idea is to jumpstart the economy to provide comfort to the private sector,” Zhao said. “This is wartime. It’s not peace. During times of war there should be special arrangements and vehicles for tackling the problems.”
ADB this month said that it expanded its trade finance facilitation programme to $1 billion from $150 million.
Japan’s Prime Minister Taro Aso pledged $22 billion in trade assistance in London this month.
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First Published: Fri, Apr 10 2009. 01 15 AM IST
More Topics: Asia | ADB | G-20 | Japan | Great Depression |