Global Financial Crisis and its Implications for Asia

Updated 17 April 2009

Sustained economic growth can contribute significantly to poverty reduction. Indeed, countries that have enjoyed economic growth for long periods of time have witnessed marked declines in poverty incidence. But an economic and financial crisis could frustrate such development. Even though countries can recover quickly from the crisis, they may not return to the same growth path as before the crisis, thus delaying further the economic development process. Because a crisis can have long-term developmental implications, ADBI is keen in making a contribution to the understanding of the causes of a crisis and to the formulation of policy measures that ADB's developing member countries (DMCs) could adopt to avoid a crisis.

The current financial crisis and global economic downturn did not originate in Asia, and, indeed, Asian countries in structural terms are generally in good shape. Nonetheless, Asian economies and financial markets have already begun to feel the impacts of the crisis, and these are likely to deepen substantially over the coming year. The most obvious areas of impact have been exports and equity markets, which have declined sharply across the region, but stresses in currency and credit markets have emerged as well, and domestic demand has softened. This sensitivity has been heightened by the export-led growth strategies followed by many countries.

ADBI is planning a series of conferences related to major aspects of the impacts of the crisis on Asia and policy recommendations. The conferences will be organized into five broad thematic areas: macroeconomic impacts and policy; real economy (sectoral) impacts; social and environmental aspects; financial regulation and reform; and regional cooperation and regional/global architecture. Topics to be included are:

• Macroeconomic impacts and policy: growth impact scenarios for the current crisis, lessons from previous crises, the prospects for rebalancing growth away from exports and policy recommendations for fiscal policy, monetary policy and currency and reserve management;
• Real economy impacts: SMEs, trade finance and industrial structure;
• Social and environmental aspects: recommendations for adjusting social policies to address the crisis as well as adjust to a post-crisis environment including reforming national insurance programs (health, pension, employment), education and the effectiveness of current policies such as Conditional Cash Transfers and developing new markets for green products and renewable energy; making a low carbon society an integral part of economic recovery and growth.
• Financial reform and regulation: ways to avoid or mitigate a systemic financial crisis in the region, ways to improve regulation and oversight of financial products, markets and investor groups, streamlining of regulatory structures, strengthening the functioning of regional financial markets, credit rating agencies and payment systems;
• Regional cooperation and regional/global architecture: recommendations for improving and/or developing regional economic policy and institutions aimed at preventing the recurrence of a systemic financial crisis in the region, improving policy coordination, promoting regional trade, and political economy aspects of cooperation; and developing Asian proposals to reform the global financial architecture.