Developing Asia as a whole is proving to be more resilient to the globaleconomic slowdown than was expected when
Asian Development Outlook 2009
) was published in March this year.Consequently, this
sees somewhat stronger growth or both thisyear and next than was earlier orecast. Te region’s economic expansionor 2009 is projected to come in at
%, up slightly rom the Marchorecast o 3.4%, on the back o much stronger growth in East Asia andSouth Asia. Te growth projection or 2010 is likewise upgraded to
%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.Unavorable 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 soen some o theeconomic jolts that hit it every ew years.Beore both the 1997–98 Asian nancial crisis and the current globaldownturn, developing Asia enjoyed years o rapid economic growth,reaping the benets 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 eectively manage nancial globalization. Developing Asiasuccessully reormed its nancial systems in the wake o the 1997–98crisis, boosting its resilience to nancial shocks, which helped shield itrom the adverse eects o the current global economic downturn.