News / Economy

US, EU Slowdown Could Draw More Capital to Asia

Asian Development Bank President Haruhiko Kuroda (File Photo)
Asian Development Bank President Haruhiko Kuroda (File Photo)
TEXT SIZE - +
Ron Corben

The Asian Development Bank says evidence of slowing growth in Europe and United States will draw more investors to better-performing Asian economies. While analysts remain upbeat over Asia's economic outlook in the coming year, a weaker U.S. dollar and contracting economies in Europe and the United States will hurt Asian exports - a key driver of growth.

Despite the recent volatility in global stock markets, the Asian Development Bank remains upbeat for growth for Asia. In an annual report on Asian capital markets, bank analysts forecast seven per cent growth in the region for 2011 and 2012.

Iwan J. Azis, head of the ADB’s Office of Regional Economic Integration, expects Asia’s recent consistent economic growth will make it favored by investors. But he says that an inflow of capital also poses challenges.

“As the dust settles I strongly believe that capital inflows will continue to come into the [Asia] region and that creates problems that create challenges for the region," said Azis. "Right after the global recession of 2008 and [investment bank] Lehman [Brothers’] collapse massive capital inflows into the region created havoc and that can be repeated after the dust settles.”

Any inflows of funds will push up the values of the region’s currencies against the U.S. dollar, undermining industries that depend on exports to the United States and Europe.

“That translates into problems or challenges for export oriented economies in Asia like Thailand for example," said Azis. "They will have to work very hard on how to deal with these issues from both sides - the quantity side and the price side - the exchange rate.”

Azis says that until recently, bank economists were mainly concerned over inflationary pressures in Asia due to rising commodity and food prices. But he says now those concerns are shifting because lower global demand eases price pressures on commodities such as oil.

Narongchai Akrasanee, a former Thai commerce minister and board director of the Export Import Bank, says that since Asia’s financial crisis in the 1990s, the region has become less dependent on European and U.S. markets and more linked to China’s and India’s economies.

“What has happened is that starting from 2007, 2008 we have been able to be less dependent on the western markets compared to the period before," said Akrasanee. "That’s why we were able to recover more quickly after 2009. I think at the moment the Asian market is a big help for us for the time being.”

Asian Development Bank economists say the region’s central banks may need to review policies such a capital controls to manage a new flood of funds.

But Tuesday’s report says a pattern of slow growth in the advanced economies is likely to continue beyond 2011. While Japan’s recovery is boosted by reconstruction from the March earthquake, sluggish job growth in the U.S. and the fiscal challenges in Europe are expected to "keep a lid on growth for some time to come."

You May Like

Algerians Vote in Presidential Election

There were few media reports of protests and clashes around the country, but so far no significant violence More

Sharks More Evolved than Previously Thought

The discovery could “profoundly affect our understanding of evolutionary history” More

Pakistan Military Asked to Protect Polio Workers

Request comes as authorities say a Taliban ban on vaccinations in 2012 and deadly attacks on anti-polio teams have prevented thousands of children from getting inoculated 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.
Google Buys Drone Companyi
|| 0:00:00
...
 
🔇
X
George Putic
April 15, 2014
In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
Video

Video Ray Bonneville Sings the Blues and More on New CD

Singer/songwriter Ray Bonneville has released a new CD called “Easy Gone” with music that reflects his musical and personal journey from French-speaking Canada to his current home in Austin,Texas. The eclectic artist’s fan base extends from Texas to various parts of North America and Europe. VOA’s Greg Flakus reports from Austin.
Video

Video Millions Labor in Pakistan's Informal Economy

The World Bank says that in Pakistan, roughly 70 percent work in the so-called informal sector, a part of the economy that is unregulated and untaxed. VOA's Sharon Behn reports from Islamabad on how the informal sector impact's the Pakistani economy.
Video

Video Passover Celebrates Liberation from Bondage

Jewish people around the world are celebrating Passover, a commemoration of their liberation from slavery in Egypt more than 3,300 years ago. According to scripture, God helped the Jews, led by Moses, escape bondage in Egypt and cross the Red Sea into the desert. Zlatica Hoke reports that the story of the Jewish Exodus resonates with other people trying to escape slave-like conditions.
Video

Video Police Pursue Hate Crime Charges Against Kansas Shooting Suspect

Prosecutors are sifting through the evidence in the wake of Sunday’s shootings in a suburb of Kansas City, Missouri that left three people dead. A suspect in the shootings taken into custody is a white supremacist. As VOA’s Kane Farabaugh reports, he was well-known to law enforcement agencies and human rights groups alike.
Video

Video In Eastern Ukraine, Pro-unity Activists Emerge from Shadows

Amid the pro-Russian uprisings in eastern Ukraine, there is a large body of activists who support Ukrainian unity and reject Russian intervention. Their activities have remained largely underground, but they are preparing to take on their pro-Moscow opponents, as Henry Ridgwell reports from the eastern city of Donetsk.
Video

Video Basket Maker’s Skills Have World Reach

A prestigious craft show in the U.S. capital offers one-of-a-kind creations by more than 120 artists working in a variety of media. As VOA’s Julie Taboh reports from Washington, one artist lucky enough to be selected says sharing her skills with women overseas is just as significant.
Video

Video UN Report Urges Speedier Action to Avoid Climate Disaster

A new United Nations report says the world must switch from fossil fuels to cleaner energy sources to control the effects of climate change. The Intergovernmental Panel on Climate Change released the report (Sunday) following a meeting of scientists and government representatives in Berlin. The comprehensive review follows two recent IPCC reports that detail the certainty of climate change, its impacts and in this most recent report what to do about it. VOA’s Rosanne Skirble has the details.
AppleAndroid

World Currencies

EUR
USD
0.7217
JPY
USD
102.17
GBP
USD
0.5949
CAD
USD
1.1009
INR
USD
60.326

Rates may not be current.