Asia urged to rethink growth policies

Asia's governments must spend more on social safety nets and reduce their reliance on export-driven growth as they grapple with an economic meltdown that will keep tens of millions trapped in poverty, finance officials said Sunday.
Japan, meanwhile, said it will make 6 trillion yen ($60.5 billion) available for currency swaps, giving nations with weaker currencies access to yen in a funding crisis. And finance ministers from Southeast Asia along with Japan, China and South Korea agreed to set up a $120 billion pool of emergency funds.
Faced with the worst global slump since World War II, many of Asia's economies are in free fall as demand for their exports -- long the engine of the region's growth -- evaporates in big Western markets.
The Asian Development Bank, holding its annual meeting in Bali, Indonesia, has warned that 61 million people will remain trapped in extreme poverty this year because of the global slump. That figure could increase to nearly 160 million if slow growth continues next year, it said.
The bank's president, Haruhiko Kuroda, said the collapse in global trade has "gathered momentum" as export markets suffer a massive contraction.
"This grave situation needs more vigorous and concerted efforts by all concerned to bring growth in the region back," he said.
Some governments in Asia -- Japan and China among them -- are already blasting their economies with hundreds of billions of dollars in stimulus spending. But it is too early to say whether this pump-priming is working, while many other governments in the region are too poor to fund such largesse.
"Asian countries must restructure their economies and focus more on domestic demand," Japanese Finance Minister Kaoru Yosano told the annual meeting.
“The Asian region needs to prop up domestic demand to avoid economic meltdown," said Yosano, also a governor of the ADB, to which Japan is a major donor.
Boosting Asia's spending on social protection - currently the lowest of any region as a percentage of gross domestic product - is a crucial step to take for boosting confidence and reducing the human cost of an economic downturn, he said.
In addition to 6 trillion yen for currency swaps, Yosano said Japan will help developing nations to borrow money by guaranteeing $5 billion of yen-denominated bonds issued by such countries.
For the $120 billion emergency funding pool, 80 percent will be contributed by China, South Korea and Japan. Governments would be able to borrow from the fund to cope with a short-term funding crunch.
The venue for the May 2-5 meeting, an international convention center nestled amid plush five-star resorts, provides a stark contrast to one of its main talking points: tackling Asia's endemic poverty.
Some hotels hosting conference delegates have nightly rates that are more than a poor family in Asia earns in one year. More than 900 million in Asia live on $1.25 or less a day.