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Asia should promote domestic demand and lessen its reliance on electronic exports May 09, 2018

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The bulk of Asia’s exports runs through, rather than to, the People’s Republic of China, leaving the region more exposed to downturns and anti-trade sentiments in developed countries than to a domestic slowdown in China. Governments should promote domestic growth and trade within Asia to lessen that exposure, economists argue in a new book by the Asian Development Bank Institute, Slowdown in the People’s Republic of China, Structural Factors and the Implications for Asia. Peter Morgan, co-chair of the research department at ADBI and one of the editors of the book, explains the conclusions of a paper by Willem Thorbecke of Japan’s Research Institute of Economy, Trade and Industry. Read the transcript https://bit.ly/2KO2jD0 Read the book https://www.adb.org/publications/slowdown-prc-structural-factors-and-implications-asia About the author Willem Thorbecke is a senior fellow at Japan’s Research Institute of Economy, Trade and Industry. About the book editors Peter Morgan is co-chair of the Research Department at the Asian Development Bank Institute Justin Yi-fu Lin is director of the Center for New Structural Economics, Peking University, China. Guanghua Wan is director of the Institute of World Economy, Fudan University, China. Know more about ADBI’s work on PRC https://bit.ly/2vVC0Yi https://bit.ly/2vQ3fDf

China’s declining growth is structural, not a cyclical downturn May 09, 2018

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The nature of the People’s Republic of China’s growth slowdown is a key question for the global economy. If it’s a bump in the road, growth in China should soon return to a high rate that can help support global growth. If it reflects deeper problems, the world may have to live without the contribution that has come to be expected from China’s hard-charging economy. Economists must first determine the factors behind China’s growth, which poses statistical problems. Read the transcript https://bit.ly/2rurpP7 Read the book https://www.adb.org/publications/slowdown-prc-structural-factors-and-implications-asia About the author Harry X. Wu, professor at the Institute of Economic Research at Japan’s Hitotsubashi University. About the book editors Peter Morgan is co-chair of the Research Department at the Asian Development Bank Institute. Justin Yi-fu Lin is director of the Center for New Structural Economics, Peking University, China. Guanghua Wan is director of the Institute of World Economy, Fudan University, China. Know more about ADBI’s work on PRC https://bit.ly/2vVC0Yi https://bit.ly/2vQ3fDf

China is facing many of the problems Japan encountered as it strives for growth Apr 27, 2018

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The People’s Republic of China needs to refocus its economy to avoid slipping into an economic downturn that could be worse than the one Japan has suffered for more than the past 2 decades. Comparing the experience of the two countries shows that China faces many of the same issues that prompted the beginning of Japan’s long economic slide in the early 1990s. While some differences could help China avoid Japan’s pitfalls, others could make it even worse. Some economic fixes are needed, and quickly. Read the transcripts https://bit.ly/2GhogH0 About the authors Yang Yao is a professor at China’s Peking University. Kyoji Fukao is a professor at Japan’s Hitotsubashi University. Tangjun Yuan is a researcher at China’s Fudan University. Read the book https://www.adb.org/publications/slowdown-prc-structural-factors-and-implications-asia Know more about ADBI’s work on PRC https://bit.ly/2vVC0Yi https://bit.ly/2vQ3fDf

Indonesia rice subsidy program improves children’s health Apr 19, 2018

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Hundreds of thousands of children in Indonesia are growing taller and heavier thanks to the government’s rice subsidy program, which ensures better nutrition despite flaws in the scheme. The government started RASKIN—rice for the poor—in 1998 to help poor and near-poor families cope with high food prices in the wake of the Asian financial crisis. Under the program, currently the largest in-kind subsidy scheme in Indonesia, eligible households across the country receive subsidized rice. Rice is a staple food, and accounts for nearly a quarter of the average monthly expenditure of poor households in Indonesia. The program is expected to fulfill 39.5% of poor households’ rice needs. Read the transcript https://bit.ly/2K2zrq7 Read the report https://www.adb.org/publications/kind-transfer-and-child-development-evidence-indonesia About the authors Bihong Huang is an ADBI research fellow Prachi Gupta was an ADBI research associate when the work was published. Know more about ADBI’s work on Indonesia https://bit.ly/2qNSfjY https://bit.ly/2vvX1IA

Green bonds offer a sustainable alternative for Asian development funding Apr 11, 2018

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Green bonds, which first appeared in 2007, finance projects that deliver environmental or climate benefits such as climate change mitigation and adaptation investments. The global green bond market is rapidly growing, from $3 billion in 2012 to more than $100 billion in 2017. The Nordic region, particularly Sweden, Norway, and Finland, has pioneered the issuance of green bonds and used specific mechanisms to access debt markets to issue green bonds. These bonds could be used by developing countries in Asia. The increase in recent years of the use of green bonds is a consequence of a wider awareness among investors of sustainability and climate change following the Paris Agreement on climate change in 2015 and the United Nations’ adoption of the Sustainable Developments Goals. Read the transcript https://bit.ly/2v8q1G8 Read the working paper https://www.adb.org/publications/green-bond-experience-nordic-countries About the author Darius Nassiry is a senior research associate at the Climate and Energy Programme, Overseas Development Institute, London, United Kingdom. Know more about ADBI’s work on bonds https://bit.ly/2HvzHgI https://bit.ly/2ILj53H

Japanese investors are looking overseas for returns, but avoiding developing Asia Apr 05, 2018

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Negative interest rates in Japan are leading banks, pension funds, and other investors to look overseas for better returns, but they are mostly ignoring developing Asia, and with rates rising in the US and Europe, that is unlikely to change. Alicia Garcia-Herrero, a prominent economist who has worked at the International Monetary Fund and is now chief economist for Asia-Pacific at the French investment bank Natixis, told the annual conference of the Asian Development Bank Institute that investors were being driven from Japanese markets by the low rates used by the Bank of Japan to boost economic activity and end decades of deflation. Read the transcript https://bit.ly/2EitXU4 Read the book https://www.adb.org/publications/implications-ultra-low-and-negative-interest-rates-asia Know more about ADBI’s work on interest rates https://bit.ly/2GxboBs https://bit.ly/2uL2KKq

Low rates are hurting developing countries, says Bank of Thailand head Mar 28, 2018

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Ultra-low or negative interest rates in Japan, the United States, and Europe placed a difficult burden on other central banks and may threaten their independence in the future. Veerathai Santiprabhob, governor of the Bank of Thailand, told the annual conference of the Asia Development Bank Institute that, with interest rates low, central banks have taken to using macroprudential tools. They are tinkering with regulations to affect the actions of markets, investors and consumers, and adjusting rules to control the flow of capital through their borders. Read the transcript https://bit.ly/2I5Z3kb About the speaker Veerathai Santiprabhob is governor of the Bank of Thailand. Watch the whole presentation https://youtu.be/1xE2LEPE8Qw?t=142 Read the book https://www.adb.org/publications/implications-ultra-low-and-negative-interest-rates-asia Know more about ADBI’s work on finance https://bit.ly/2DYo5zi https://bit.ly/2GykwFb

Central banks are losing power to influence markets as interest rates hit zero Mar 28, 2018

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Central banks are running out of wiggle room, having lowered interest rates, in some cases to zero or negative, and are losing influence over markets becoming accustomed to a low-rate regime. “Forward guidance” is losing traction. Narayana Kocherlakota, former president of the Minneapolis Federal Reserve Bank, says central banks can try to guide public perception by hinting at their intentions, a practice known as forward guidance in banking circles, and he used to think that once interest rates were at the lowest they could go—a position called the lower bound—forward guidance was a good tool to use. But Kocherlakota, now professor of economics at the University of Rochester, told the annual conference of the Asian Development Bank Institute he has changed his mind. Read the transcript https://bit.ly/2pKGfQI About the speaker Narayana Kocherlakota is a now professor of economics at the University of Rochester. Watch the whole presentation https://youtu.be/BKnJS37KbGE?t=2420 Read the book https://www.adb.org/publications/implications-ultra-low-and-negative-interest-rates-asia Know more about ADBI’s work on finance https://bit.ly/2DYo5zi https://bit.ly/2GykwFb

The global agenda is evolving, and big players need to change the rules Mar 23, 2018

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Global governance has undergone significant change since the late 1990s, with the number of global players in health, trade, and development finance rapidly increasing, mobilizing more funds for health and development in developing countries, and spurring global trade. This trend has challenged the three most prominent intergovernmental bodies in these areas—the World Health Organization, the World Trade Organization, and the World Bank. They now need to adapt to a new world order where they play a less central role. After World War II, governments around the world forged international agreements and treaties, forming global bodies to promote international good in almost every social sphere. In 1944, the World Bank’s predecessor, the International Bank for Reconstruction and Development, was established to help rebuild economies devastated by the war. Three years later, the General Agreement on Tariffs and Trade, which over time evolved into the WTO, was formed. The WHO was set up soon after in 1948 as the United Nations’ specialized agency for health. But in the 1990s, new actors—nonstate and nongovernment organizations—emerged, challenging the authority of the WHO, the WTO, and the World Bank, says Matthias Helble, senior economist and co-chair of the research department at the Asian Development Bank Institute. Read the transcript https://bit.ly/2ue7k3l Read the working paper https://www.adb.org/publications/comparison-global-governance-across-sectors-health-trade-development-finance About the authors Matthias Helble is senior economist and co-chair of the Research Department at the Asian Development Bank Institute. Jera Lego is an ADBI associate. Zulfiqar Ali was an ADBI associate at the time the research was published. Know more about ADBI’s work on Trade https://bit.ly/2oTzgng https://bit.ly/2D3NTJH Health https://bit.ly/2pxdEyb https://bit.ly/2HVr2CZ

Commodity price shocks hurt credit growth in developing countries Mar 23, 2018

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Big swings in global commodity prices unnerve governments in developing countries reliant on such export revenue, and curb credit growth as banks tighten lending during price volatility. A look at 1,600 banks from 78 developing countries between 2004 and 2015, a period of large swings in commodity prices, found lenders become more cautious when prices fluctuate because clients may not be able to service loans, eroding the quality of bank assets and capital. Banks with relatively lower deposits and poor asset quality are particularly vulnerable to commodity shocks and tend to be more aggressive in responding to price movements. Similarly, banks that are more sensitive to fluctuations in commodity prices, and see a decline in deposit funding and an increase in bad loans in response to a fall in commodity prices, reduce credit supply when asset quality falls. The data shows that a bank with high exposure to commodities and low deposits curbs lending by as much as 4.1 percentage points when commodity prices fall below expected trends, more if the fall deepens. Read the transcript https://bit.ly/2G4VR7O Read the working paper https://www.adb.org/publications/international-commodity-prices-and-domestic-bank-lending-developing-countries About the authors Isha Agarwal is a PhD student at Cornell University, United States. Rupa Duttagupta is chief of the Emerging Markets Division, International Monetary Fund. Andrea F. Presbitero is an economist at the IMF and assistant professor in economics at the Università Politecnica delle Marche, Ancona, Italy. Know more about ADBI’s work on Commodities https://bit.ly/2pBo7Yu Credit https://bit.ly/2FW1n0n

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