Boost domestic demand, shrink inequality to become rich country by 2050: ADB chief Masato Kanda

Speaking to reporters at the beginning of ADB’s annual board of governors meeting in Milan, Kanda said that while private sector growth will add jobs and facilitate innovation, governments have to continue reforms and boost domestic demand by reducing income inequality while opening up their economies.

Also Read | India can hit 6.5% growth if US trade deal finalized by Oct: Niti Aayog member

“Of course, they need to step up their competitiveness. Private sector growth is the key as it will help add more jobs and most importantly drive cutting edge innovation."

“Human capital development is very much important more than ever in catching up with the global economy undergoing a technological transformation," said Kanda.

Also Read | 5 insights about the US economy, according to the Fed’s Beige Book

ADB had said in its April 2025 Asian development outlook which was finalized before the Trump tariffs were announced on 2 April that the region will be challenged by rising trade barriers and significant trade uncertainty, but solid domestic demand and electronics exports will support growth.

For FY26 calendar year, ADB has forecast 6.7% growth for India, in line with India’s projection of 6.3-6.8% real GDP growth for the financial year ending in March 2026.

On Sunday, Kanda observed in his opening remarks at the briefing that the Asia-Pacific economy is coming from a position of strength, but there is a lot of uncertainty ahead and therefore, cannot remain complacent.

Also Read | The rush to beat tariffs is distorting the economy. It has barely started.

“In the midst of these challenges, reforms must continue to ensure long-term growth and stability. Countries must pursue two key strategies. First is to implement sound economic policies to safeguard stability and sustain investment flows. Second is to enhance regional connectivity to strengthen the region’s collective resilience."

Kanda also proposed transforming food systems in Asia and the Pacific in view of growing pressure from climate change, environmental degradation, and disruptions to global trade.

The ADB on Sunday announced plans to step up its support to long-term food and nutrition security in Asia and the Pacific by $26 billion, raising its total funding for food security measures to $40 billion over 2022–2030. This will fund programmes in food production from farming and processing to distribution and consumption.

To a question on the impact of remittance flow to developing economies due to rising border restrictions in some developed countries like the US, Kanda said the ADB being an apolitical institution, cannot comment on country-specific policies. But he added that in the case of some countries, remittance may be the largest flow of foreign currency and this helps in feeding people.

“In general economic terms, quite often, if you manage the situation in a sound way, it will produce a win-win situation. It will increase competitiveness (of an economy) and, through better allocation of labour forces across countries, will eventually increase productivity of the global population. So, in principle, free movement of capital and labour should be good but it depends on the specific situations and we witness that it is a big discussion in domestic politics. It is a rather challenging time," Kanda said.

To a question on rising tensions between India and Pakistan too, the ADB president said that the multilateral agency is an apolitical entity and cannot comment on the issue.

"But our belief is that it is peace and political stability that are the basis for inclusive and sustainable growth and development. The ADB has supported peace and stability through economic cooperation and we will continue to do this."

The writer is in Milan at the invitation of ADB.