News / Asia

ADB Warns About Growing Flow of Foreign Money

Asian Development Bank economist Lee Jong-wha
Asian Development Bank economist Lee Jong-wha

The Asian Development Bank has raised its forecast economic growth for Asia's developing nations this year because of strong exports and consumption. But the bank warns about risks from the growing flow of foreign money to the region.

Robust economic expansion in China and India will lift average economic growth in developing Asia to 8.2 percent this year. The Asian Development Bank previously estimated growth at 7.5 percent.

Slowdown risk

However, growth is expected to fall to 7.3 percent next year because of the risk of a slow down among the large industrialized economies, a major destination of the region's exports.

China's economy is expected to grow 9.6 percent this year but that could slow to 9.1 percent next year. India's economic growth, however, is expected to increase next year to 8.7 percent from 8.5 percent this year.

Lee Jong-wha, the bank's chief economist, says foreign capital will continue to flow to developing Asian economies. But he warns that it comes with some risks.

"The massive inflows, and the possibility of sudden withdrawal, actually play a potential risk of disruption in the Asian2- financial markets and build pressure on the exchange rates," Lee said.

More foreign money

Last year, about $200 billion in investments flowed into the region and stayed. This contributed to an increase in foreign exchange reserves and stronger currencies - a growing concern for the region's export-dependent economies. For example, the Japanese central bank intervened in the foreign exchange market to weaken the yen to protect Japanese exports.

There are worries around the world that the fund inflow could trigger a currency war, in which central banks dump their own currencies to keep them weak. Lee says if they do, they will face another problem.

"The massive liquidity goes into the domestic financial markets so it creates another pressure on the inflation side," Lee said.

The Thai baht and the Malaysian ringgit have strengthened by nearly 11 percent since September 2008. But the Chinese yuan has appreciated only about one percent, and the Vietnamese dong has fallen nearly 15 percent because of the government's devaluation of the currency.

Expanding economies

The ADB, a non-profit development lender, forecasts Southeast Asian economies will expand an average of 7.4 percent this year. Singapore will be the fastest-growing economy in Southeast Asia this year at 14 percent, followed by Thailand at 7 percent. But growth in the sub-region will fall to 5.4 percent next year because of slowing export demand.

In Central Asia, growth this year is expected to be 5.1 percent, up slightly from the ADB's original forecast of 4.9 percent. Next year the region's economies are likely to expand about 5.7 percent. The ADB's 2010 update says exports of minerals, oil and natural gas are helping the regional expansion.

You May Like

Turkey's Erdogan: Women Not Equal to Men

Speaking at conference in Istanbul, President Erdogan says Islam has defined a position for women: motherhood More

Ahead of SAARC Summit, Subdued Expectations

Some regional analysts say distrust between Pakistani, Indian officials has slowed SAARC's progress over the year More

Philippines Leery of Development on Reef Reclamation in S. China Sea

Chinese land reclamation projects in area have been ongoing for years, but new satellite imagery reportedly shows China’s massive construction project More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Aung San Suu Kyi: Myanmar Opposition to Keep Pushing for Constitutional Changei
X
November 24, 2014 10:09 PM
Myanmar opposition leader Aung San Suu Kyi says she and her supporters will continue pushing to amend a constitutional clause that bars her from running for president next year. VOA's Than Lwin Htun reports from the capital Naypyitaw in this report narrated by Colin Lovett.
Video

Video Aung San Suu Kyi: Myanmar Opposition to Keep Pushing for Constitutional Change

Myanmar opposition leader Aung San Suu Kyi says she and her supporters will continue pushing to amend a constitutional clause that bars her from running for president next year. VOA's Than Lwin Htun reports from the capital Naypyitaw in this report narrated by Colin Lovett.
Video

Video Mali Attempts to Shut Down Ebola Transmission Chain

Senegal and Nigeria were able to stop small Ebola outbreaks by closely monitoring those who had contact with the sick person and quickly isolating anyone with symptoms. Mali is now scrambling to do the same. VOA’s Anne Look reports from Mali on what the country is doing to shut down the chain of transmission.
Video

Video Ukraine Marks Anniversary of Deadly 1930s Famine

During a commemoration for millions who died of starvation in Ukraine in the early 1930s, President Petro Poroshenko lashed out at Soviet-era totalitarianism for causing the deaths and accused today’s Russian-backed rebels in the east of using similar tactics. VOA’s Daniel Shearf reports from Kyiv.
Video

Video Hong Kong Protests at a Crossroads

New public opinion polls in Hong Kong indicate declining support for pro-democracy demonstrations after weeks of street protests. VOA’s Bill Ide in Guangzhou and Pros Laput in Hong Kong spoke with protesters and observers about whether demonstrators have been too aggressive in pushing for change.
Video

Video US Immigration Relief Imminent for Mixed-Status Families

Tens of thousands of undocumented immigrants in the Washington, D.C., area may benefit from a controversial presidential order announced this week. It's not a path to citizenship, as some activists hoped. But it will allow more immigrants who arrived as children or who have citizen children, to avoid deportation and work legally. VOA's Victoria Macchi talks with one young man who benefited from an earlier presidential order, and whose parents may now benefit after years of living in fear.
Video

Video New Skateboard Defies Gravity

A futuristic dream only a couple of decades ago, the hoverboard – a skateboard that floats above the ground - has finally been made possible. While still not ready for mass production, it promises to become a cool mode of transport... at least over some surfaces. VOA’s George Putic reports.
Video

Video Falling Gas Prices Impact US Oil Extraction

With the price of oil now less than $80 a barrel, motorists throughout the United States are benefiting from gas prices below $3 a gallon. But as VOA’s Kane Farabaugh reports, the decreasing price of petroleum has a downside for the hydraulic fracturing industry in the United States.
Video

Video Tensions Build on Korean Peninsula Amid Military Drills

It has been another tense week on the Korean peninsula as Pyongyang threatened to again test nuclear weapons while the U.S. and South Korean forces held joint military exercises in a show of force. VOA’s Brian Padden reports from the Kunsan Air Base in South Korea.
Video

Video Mama Sarah Obama Honored at UN Women’s Entrepreneurship Day

President Barack Obama's step-grandmother is in the United States to raise money to build a $12 million school and hospital center in Kogelo, Kenya, the birthplace of the president's father, Barack Obama, Sr. She was honored for her decades of work to aid poor Kenyans at a Women's Entrepreneurship Day at the United Nations.
Video

Video Ebola Economic Toll Stirs W. Africa Food Security Concerns

The World Bank said Wednesday that it expects the economic impact of the Ebola outbreak on the sub-Saharan economy to cost somewhere betweenf $3 billion to $4 billion - well below a previously-outlined worst-case scenario of $32 billion. Some economists, however, paint a gloomier picture - warning that the disruption to regional markets and trading is considerable. Henry Ridgwell reports from London.
Video

Video Chaos, Abuse Defy Solution in Libya

The political and security crisis in Libya is deepening, with competing governments and, according to Amnesty International, widespread human rights violations committed with impunity. VOA’s Al Pessin reports from London.
Video

Video US Hosts Record 866,000 Foreign Students

Close to 900,000 international students are studying at American universities and colleges, more than ever before. About half of them come from Asia, mostly China. The United States hosts more foreign students than any other country in the world, and its foreign student population is steadily growing. Zlatica Hoke reports.

All About America

AppleAndroid