As the last of the participants exited the 1.5 million sq ft Songdo Convensia on the 5th of May, a sense of relief was palpable. After three years, the Asian Development Bank (ADB) concluded successfully the first in-person annual gathering in Incheon, South Korea.
It may also explain why a number of the top economic and monetary officials of member countries heading home, or to their next official engagement, expressed to The Asset a sense of quiet confidence, having weathered an unusually turbulent time: a pandemic, war in Europe, and the most aggressive cycle of rate hikes by the central bank of the world’s largest economy.
Yet, navigating the coming months is unlikely to be any simpler. In the words of the president of the ADB Masatsugu Asakawa, Russia’s invasion of Ukraine could renew a surge in commodity prices, stoke global inflation, and further monetary tightening. “Even though food and energy prices have declined from the peak – however, there remains a risk of escalation,” he worries. “Higher debt and interest rates have also magnified the risk to financial stability – this can be seen in the banking sector issues experienced recently in the US and Europe.”
India, which is the host country for the G20 summit this year, also acknowledges the prevailing economic uncertainties. “We are passing through an age of resets: of fuel, food, fertilizer, debt, energy, supply chain, sustainability, fiscal stability, etc.,” shares Nirmala Sitharaman, the country’s finance minister, speaking at the annual meeting’s business session. Despite these, she says the Indian economy is on a relatively stronger trajectory.
It is a similar condition to what’s happening elsewhere in the region. Sri Mulyani, Indonesia’s finance minister, relates that the country is showing a strong recovery with a growth rate of 5.3% in 2022 which should stabilize at 5% this year, supported by robust domestic demand. “But we have to continue to be vigilant because of the elevating global risk and the challenges, especially with the tightening liquidity and increasing interest rate and geopolitical fragmentation,” she continues.
Thailand’s finance minister Arkhom Termpittayapaisith says “the worst of the pandemic is fully behind us – as we are able to meet face-to-face at this annual meeting”. Nevertheless, he points out that geopolitical tensions and volatility in the global financial market still threaten to derail recovery.
“Cooperation remains essential if we are to work through the path of recovery together,” he believes, and that connectivity is the key factor to the region’s rebound, especially infrastructure linkages with digital connectivity.
Even crisis-hit Sri Lanka is taking comfort from recent developments. “We are looking forward with a glimmer of hope as we have just navigated our way out of the abyss of extreme complication we faced,” Ali Sabry, minister of foreign affairs, relates. “Suffering of Sri Lankans has been eased to a certain degree.” He recognizes, however, that there are demanding tasks ahead and the country is undertaking painful reforms.
“The [ADB annual meeting] theme: Rebounding Asia: Recover, Reconnect, and Reform, is the best way to summarize what the Asian economies must do in the coming years,” says Felipe Medalla, the governor of the Philippine central bank, Bangko Sentral ng Pilipinas. The Philippines was among the fastest-growing economies in 2022 at 7.6%, and he projects the growth to be at 6% to 7% this year.
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In the short term, the region can draw insight from Medalla's impression of this year’s ADB annual meeting host city, Incheon: “I walked around a lot in the city since I arrived, and I am very impressed by Incheon’s parks and buffers between the noisy highways and vehicular traffic.” It may also be what Asia-Pacific needs to strengthen to insulate itself from the looming crisis further afield.