ADB Forecast Sees Rising Asian Risk

The Asian Development Bank’s latest economic monitor has plenty of dire warnings about the impact of the Euro crisis and of possible renewed recession in the US on Asia. But these barely show up in its headline growth forecasts. The ADB points to rising risk with serious consequences but says they are manageable if the region acts “promptly, decisively and collectively.” That of course is a big “if” given the efforts made by some – notably China and South Korea – to use weak exchange rates as a trade tool with an impact on Asia as well as the west. From fiscal and external account positions most countries are able to engage in fiscal and monetary stimulus. But those may not be quite as strong as they appear at first sight. Firstly, official numbers can often lie and for some countries a much sharper than expected deterioration in their terms of trade could hit hard. The latter issue gets scant attention in a report which contains a wealth of key US and European data and analysis on cross border banking and other capital flows.

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