ADB's top economist says developing Asia must tackle economic hot spots |
|
|
|
Published
:
Tue, 27 Mar 2007 07:20
|
TOKYO (XFN-ASIA) - Asia's developing economies must act quickly to contain overheating and move towards more flexible currencies to ensure sustainable growth, according to the Asian Development Bank's (ADB's) chief economist, Ifzal Ali.'Macro-economic stabilization is the immediate priority,' Ali told reporters here as the ADB unveiled its annual outlook report forecasting growth for developing Asia of 7.6 pct this year and 7.7 pct next year.'To stay on this high growth path, Asian countries will have to quickly address macroeconomic stresses that are arising because of the very rapid rate of growth in 2006,' he said.Ali said fast growth was fueling sharp increases in house, equity and consumer prices. The huge foreign currency reserves built up in developing Asia are also inflating money supplies, leading to asset market bubbles, he said.'These overheating pressures which are simmering will need to be addressed,' Ali warned.'I think the time has now come for developing Asian countries to take a more open view on allowing greater flexibility in exchange rates.'Falling oil prices and monetary tightening should help to take some steam out of developing Asian economies, but unless their currencies are allowed to rise, interest rates will have to go up, choking off investment, Ali said.The economist said developing Asia should also make better use of its foreign exchange reserves, which are together worth almost 2.3 trln usd.He said about half of this could be invested in assets with higher yields than those in which it is invested now -- believed to be mostly US-dollar instruments -- with the returns used to pay debt or invest in infrastructure and other projects.
|
|
|
|
Print this Story
Oil and utilities highlights to 09:15 GMT 