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Asian trade links strengthen economic resilience, says ADB

Oct 25. 2017
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By The Nation

Growing trade and investment linkages in Asia and the Pacific help improve the region’s economic resilience to uncertainties in the global economic and trade policy environment, according to a new Asian Development Bank (ADB) report on Wednesday.

The Asian Economic Integration Report 2017 (AEIR) examines recent regional integration trends and introduces a new regional integration index. The report also includes a chapter on how Asia can strengthen its financial resilience in an era of financial interconnectedness.

Strong intraregional trade and investment are acting as a buffer for the region against uncertainties in global trade and economic growth, according to the report. In 2016, Asia’s intraregional trade share measured by value rose to 57.3 per cent – a record high, up from an average of 55.9 per cent from 2010 to 2015.

Foreign direct investment (FDI) within Asia rose in absolute value to reach $272 billion (Bt9 trillion) in 2016, despite a 6 per cent decline in global FDI flows into the region.

This intraregional FDI increased as a share of total FDI to the region from 48 per cent in 2015 to 55 per cent in 2016. Given the role intra-Asian FDI plays in enhancing global and regional value chain development, this is expected to help strengthen the region’s trade growth globally.

Asian economies have continued expanding their global presence, with FDI originating from Asia rising 11 per cent in 2016 to $482 billion, primarily through investment in renewable energy, natural resources, semiconductors, and information technology.

“Asia and the Pacific is leading a recovery in world trade that is helping the region to maintain strong growth momentum amid global economic and trade policy uncertainty,” said Yasuyuki Sawada, ADB’s chief economist. “Asia’s continued integration and cooperation will underpin regional economic growth and financial resilience.”

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