Asia urged to plan stimulus exit to sustain growth

MANILA - Asian countries must carefully time their exit from stimulus packages to sustain recovery from the global economic slump, the Asian Development Bank (ADB) said Thursday.

Haruhiko Kuroda, president of the Manila-based ADB, said each country needs to calibrate policy adjustments to individual situations also to cushion the region from future shocks.

“We have to be careful about this because the impact of the global economic crisis on developing Asia was not uniform and was diverse,” he told a press conference at the start of a two-day Manila forum on the impact of the slump.

“The timing of exit from policy stimulus needs to be tailored to the countries’ individual situations, taking into account inflation risks,” he added.

The ADB said Asian economies were expected to lead the recovery from the global financial crisis, with growth anticipated to quicken this year to 6.6 percent from 4.5 percent in 2009.

But Kuroda cautioned against ending stimulus policies too quickly.

“While we believe developing Asia is leading the global economic recovery, it is too early to relax vigorous efforts to restore demand and stabilise financial systems,” he said.

“In particular, exit strategies for fiscal stimulus must be carefully timed,” he added.

Kuroda noted that poverty reduction would not be sustained at the pace of pre-crisis years unless sources of growth were rebalanced toward more domestic and regional demand.

“It is imperative for the region to bring growth back to its higher trajectory to cover the lost ground on poverty reduction, and to support global recovery,” he said.