ADB to Asia: Stay on reform path while building 'firewall' vs. recession

The Asian Development Bank reminded its member-countries Thursday that the region "must not veer from long-term structural reforms already underway to further its economic transformation" while it builds its "firewall against possible escalation of the global financial crisis that broke out in 2008.   It noted "the Gini-coefficient—the most common measure of inequality—has risen sharply from 38 to 47" in the past two decades in Asia.   The inequality became more pronounced as “nearly 20 percent of developing Asia’s total income” went to the top 5 percent, the ADB said.   In a new report presented at the Governors’ Seminar during the bank's ongoing 45th annual meeting, the multilateral lender said Asia “must update its growth model to accommodate the new norm of prolonged restructuring in advanced economies.   “... [L]ong-term prosperity hinges on relying more on domestic and regional markets as well as expanding ties with Latin America and Africa,” according to the report, "How Can Asia Respond to Global Economic Crisis and Transformation," released Thursday.   The ADB warned that 2012 “could prove crucial. Financial tensions in Europe could escalate further and there remains concern over the fledgling economic recovery in the US.”   Estimates of the multilateral lender showed that if the United States and eurozone go into recession this year, the growth of East Asia would be cut by 0.5 to 2.5 percentage points while the whole region “would lose 0.9 percentage points,   In a news release, the ADB noted though that any impact on trade from a full-blown crisis “would still be less today than in 2008/09 as Asia’s markets have diversified.   Philippine trade (imports and exports) with Japan is 15.53 percent of its trading activity with the whole world. The US has a 13.05 percent share, while China’s piece of the Philippine trade pie is 10.97 percent. —Earl Victor Rosero/OMD/VS, GMA News