Asia will drive global recovery, ADB financial forum

Hong Kong's Chief Executive Leung Chun-ying attends the Asian Financial Forum in Hong Kong January 13, 2014.

HONG KONG - Asian financial communities remain confident that the region will further power the global economy despite worries about US monetary policy and the possibility of China's economy making a hard landing.

However, the president of the Asian Development Bank (ADB) has warned that political instability will dampen economic growth.

Most of participants at the Asian Financial Forum hosted yesterday by the Hong Kong Trade Development Council said they believed that Asia would be able to strengthen the recovery of the global economy that started last year.

Asked in which areas Asia would have the highest impact on the global financial landscape, 56.8 per cent of them voted for powering global economic growth, 30.4 per cent for exporting sovereign and private wealth, and 12.8 per cent for exemplifying financial and fiscal prudence. The survey was conducted in the morning plenary session on "Asia: Powering World Growth".

Responding on what the year's biggest risk to the global economy was, 16.2 per cent said a relapse of the European sovereign debt crisis, 31.7 per cent worried about US monetary policy, 29.1 per cent were concerned about a hard landing of the Chinese economy and 23 per cent worried about structural issues in emerging markets.

They were optimistic about the resilience of Asian economies after the 2008 global financial crisis. Asked whether governments in Asia could reduce vulnerability to financial crisis, 67.2 per cent said yes, against 32.8 per cent who said no.

About 3,000 people comprising representatives from financial sectors, academics, regulators, policy-makers and journalists from all over the world attended yesterday's forum in Hong Kong, and most of them were Asians.

Most of the participants were either neutral or optimistic on the performance of the global economy this year, while only about 10 per cent were pessimistic.

Hong Kong Chief Executive Leung Chun-ying cited the International Monetary Fund's projection of emerging-Asia growth of 6.5 per cent this year, which is much better than the average growth rate in advanced economies of 2 per cent.

Meanwhile, Takehiko Nakao, president of the ADB, said tapering of the US quantitative easing programme had become a headwind for Asian economic growth this year, but overall economic conditions were positive.

The ADB projects that gross domestic product in the 45 developing economies it oversees will expand by 6.2 per cent on average this year.

"That growth rate is robust by global standards," he said.

Mainland China's GDP is expected to grow by 7.5 per cent and Hong Kong's by 3.8 per cent this year, while Southeast Asia would expand by 5.2 per cent.

"Political stability is a basis for economic growth," Nakao said without pointing to specific disputes.

His comment, however, reflected concerns over the international conflicts in the region and local political turmoil in some countries including Thailand, Bangladesh and Cambodia.

China and Japan have been engaged in a territorial dispute that many people think could threaten regional economic prosperity.