Emerging economies, including the Philippines, should brace for the worst and expect dwindling export revenues and remittances from workers overseas as well as rising capital outflows in the next 12 months through 2010, the Asian Development Bank (ADB) warned yesterday.
In a speech that opened a two-day forum in Manila, ADB President Haruhiko Kuroda issued a stark warning that the region remains vulnerable to spillover effects from the global financial crisis that sprang from the US.
“As the crisis unfolds, it is becoming apparent that no country could remain immune," Mr. Kuroda told an audience of Asian finance ministers and monetary authorities.
Already, the region shed $9.6 trillion in wealth last year, about a year’s worth of economic output and a fifth of the $50 trillion in financial losses globally, a report released yesterday by the Manila-based bank said.
The massive figure reflects the extent of the integration of emerging and developing nations into the global economy, bolstering critics of the so-called decoupling theory in which developing economies are supposed to be immune from the crisis in Western economies. The ADB said such interconnection is “unlikely to unwind."
“Most emerging market economies, including in developing Asia and Latin America, are at a crossroads, and the next twelve to eighteen months will be very difficult," said the ADB report titled “Global Financial Turmoil and Emerging Market Economies: Major contagion and a shocking loss of wealth?"
“The perception that they had broken the links with the larger economies has been painfully refuted by the hard facts of the last 18 months."
The ADB, which projects the region’s economic growth to slip by 2-2.5 percentage points this year, said the decline is only a “minimum" adverse outcome of the fallout from the crisis.
“Even as Asia and Latin America have diversified their investment and trading partners, the effect of the slowdown on exports, finance and investment is earthshaking," the ADB said.
The outlook for countries that benefit from remittances, including the Philippines — which joins India and Mexico as the largest recipients of money sent home by workers overseas — is dim, the ADB said.
The Philippines saw a 14 percent growth in remittances last year to $16.4 billion. Various forecasts predict zero to single-digit growth this year.
“The prospects for 2009 are equally dire, with adverse consequences for the well being of many millions of households among developing countries," the report read.
The bank is scheduled to put out its country-specific economic outlook on the Philippines by the end of the month.
A deterioration in the region’s external accounts, mainly from the large sum of capital outflows, is one of the more worrisome consequences of the crisis, the ADB said.
“The external accounts are reflecting the consequences of the fall in prices, economic activity, and in wealth, and capital flows are falling drastically," it pointed out.
Linkback:
https://tubagbohol.mikeligalig.com/index.php?topic=18521.0
Topic: Developing Economies Should Expect The Worst (Read 894 times)