In its report titled “Emerging Asian Regionalism,” the Asian Development Bank said Asia will account for as much as 35 percent of world gross domestic product (GDP) in purchasing-power parity [PPP] terms, from only 28 percent in 2005. By then, Asia’s GDP is set to be more than 50-percent larger than the European Union’s or North America’s.

While continued growth will reinforce the region’s market-led integration, official cooperation, production and financial markets integration, economic interdependence and inclusive and sustainable growth will need to intensify based on sound economic principles.

The report highlights that Asia is less integrated in finance than in trade but financial markets are now larger, deeper, and more sophisticated than they were a decade ago. The ADB Study urges policymakers to strengthen supervision, surveillance and dialogue on financial markets through creation of a new, high-level “Asian Financial Stability Dialogue.”

This, the bank said, will also generate greater confidence in financial institutions and protect investors. “These could lead to a virtuous cycle: greater investments in regional markets, including [those] by Asian investors, would generate new products and services that make markets more efficient and attractive,” the ADB said.

With the growth of trade and financial ties, Asia’s macroeconomic interdependence has also increased. The region faces a challenging period ahead as global payment imbalances appear increasingly unsustainable as the credit turmoil unfolds and global economic slowdown deepens.

The challenge to Asian policy makers is to monitor global and regional developments closely, and to be prepared to act together if region-wide responses are needed.

3,000+ leaders of government, the private sector, academe and civil society from around the world will gather in Madrid this week for the 41st Annual Meeting of the Asian Development Bank (ADB) – the leading development organization in the world’s most dynamic and fastest growing region.

This entry was posted on Monday, May 5th, 2008 at 3:16 pm and is filed under Government, Trade, Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.