East Asia Needs Collective Approach to Tackle Global Crisis, Secure Long Term Growth – Study

TOKYO (19 March 2009) – East Asian countries need to take a collective approach to the current global economic crisis while developing long-term policies that secure sustainable growth and help cushion them against future financial shocks, says a new report released by the Asian Development Bank Institute for the Asian Policy Forum.

"Recommendations of Policy Responses to the Global Financial and Economic Crisis for East Asian Leaders" lays out a series of suggested short-term stabilization actions to help countries counter the crisis, while also putting forward ideas for longer term structural change.

It also recommends that East Asian leaders attending next month’s G20 summit meeting adopt a strong coordinated approach to issues up for discussion. The report is intended to fill the gap caused by the perception that the region has not been proactive enough in developing a coordinated position on the crisis.

The short-term suggested measures focus on monetary policy, currency management, financial markets, fiscal policy, and trade policy. In the longer term, the report recommends a greater focus on promoting increased domestic and regional demand to counter an expected decline in trade with developed countries.

"It is important for East Asian economies to implement measures that will help reduce their vulnerability to future shocks. In the medium-term, exports to developed economies will be less of an engine of growth for the region than in the past and therefore East Asia will need policies to facilitate a shift toward inclusive, sustainable growth driven by regional demand," says Masahiro Kawai, Dean of ADBI.

The report notes that if East Asian leaders attending the G20 Summit can agree on a clear, coordinated set of measures to counter the crisis, it will boost confidence in their economies, and show that the region can be a key player in global recovery efforts.

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Tokyo-based ADBI, which is a subsidiary of Asian Development Bank, was established in 1997 to help build up knowledge on poverty reduction and actions needed to support long-term growth in developing economies in Asia and the Pacific.

The Asian Policy Forum, established in 1999, brings together leading researchers to analyze key development issues affecting the region, and to make policy recommendations on them. ADBI is the secretariat.