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Asian Development Bank
Broadening opennessor a resilient Asia
Update
ASIAN DEVELOPMENT
Outlook
2009
 
©  Asian Development Bank All rights reserved. Published .Printed in the Philippines.ISSN -Publication Stock No. FLSCataloging-in-Publication DataAsian Development Bank.
 Asian Development Outlook 2009 Update
.Mandaluyong City, Philippines: Asian Development Bank, 2009
.
. Economics. . Finance. . Asia. I. Asian Development Bank.Te annual
 Asian Development Outlook
provides a comprehensive economic analysis o  economies indeveloping Asia and the Pacic.Te views expressed in this book are those o the authors and do not necessarily reect the views and policies o the Asian Development Bank (ADB) or its Board o Governors or the governments they represent.ADB does not guarantee the accuracy o the data included in this publication and accepts no responsibility orany consequence o their use.By making any designation o or reerence to a particular territory or geographic area, or by using the term“country” in this document, ADB does not intend to make any judgments as to the legal or other status o any territory or area.ADB encourages printing or copying inormation exclusively or personal and noncommercial use with properacknowledgment o ADB. Users are restricted rom reselling, redistributing, or creating derivative works orcommercial purposes without the express, written consent o ADB. ADB Avenue, Mandaluyong City  Metro Manila, Philippinesel +   Fax +    www.adb.orgFor orders, please contact:Department o External RelationsFax +   adbpub@adb.org
 
Foreword
Developing Asia as a whole is proving to be more resilient to the globaleconomic slowdown than was expected when
 Asian Development Outlook 2009
(
 ADO 2009
) was published in March this year.Consequently, this
Update
sees somewhat stronger growth or both thisyear and next than was earlier orecast. Te region’s economic expansionor 2009 is projected to come in at
 3.9
%, up slightly rom the Marchorecast o 3.4%, on the back o much stronger growth in East Asia andSouth Asia. Te growth projection or 2010 is likewise upgraded to
6.4
%rom 6.0% in March.Te global economy is experiencing its worst peace-time slump ineight decades. World trade and industrial production are set to declinesharply this year, leading to a contraction o the world economy.Unavorable events originating in the major industrial economieshave cascaded on to developing Asia. Te region’s more open economieswere hit the hardest, mainly rom alling global demand or their exports.Double-digit declines in exports were common since the last quarter o 2008 through the rst hal o this year.As in the major industrial economies, governments and centralbanks in the region were quick to remedy the growth slack, providingthe necessary scal and monetary stimuli. Economic activity in thelarge developing Asian economies rebounded and output looks set or aV-shaped comeback.But even with a nascent recovery, the region should not becomplacent. Downside risks to the outlook remain. A prolonged globalrecession will reduce the speed at which developing Asia can return to itspotential rate o growth. Hasty removal o scal and monetary stimulican likewise degrade the ongoing recovery.Policy measures to broaden openness need to be adopted to supporteconomic resilience and sustained development. In the last 60 years,the multilateral trading system has underpinned global growth andprosperity. Globalization and openness must continue, but their scopeand structure need to be reviewed i the region is to soen some o theeconomic jolts that hit it every ew years.Beore both the 1997–98 Asian nancial crisis and the current globaldownturn, developing Asia enjoyed years o rapid economic growth,reaping the benets o its nancial and trade openness. Te onset o bothperiods o turmoil, however, brought to the ore the perils o excessiveand unbalanced openness.A major lesson rom the 1997–98 crisis is that openness must bematched with well-entrenched institutions and regulatory systemsthat can eectively manage nancial globalization. Developing Asiasuccessully reormed its nancial systems in the wake o the 1997–98crisis, boosting its resilience to nancial shocks, which helped shield itrom the adverse eects o the current global economic downturn.
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