At the grand opening of the 52nd ADB Annual Meeting on Friday, Nakao said the region would expand by 5.7 per cent this year, and the economy could grow double if the region continues to grow 6 per cent annually.

“Excluding the four newly industrialised economies (Hong Kong, Korea, Singapore and Taipei), Asia and the Pacific is expected to grow 6.2 per cent this year,” he said.

According to the bank’s chief, China is projected to grow at 6.3 per cent for the year while India’s growth will remain solid at 7.2 per cent. Southeast Asia will sustain growth at close to 5 per cent until 2020. In Central Asia, growth will be 4.2 per cent this year. Despite an earthquake in Papua New Guinea last year, the Pacific’s growth is projected to rebound to 3.5 per cent this year.

“Economic growth in the region remains solid, while there is much discussion about a slowdown and uncertainties in the global economy,” he said.

“In some countries, growth is even accelerating. Countries need to continue to pursue prudent macroeconomic policies, implement structural reforms, and invest in human capital and infrastructure.”

According to Nakao, Maintaining open trade and investment regimes is key to vibrant and sustainable growth. In this respect, the ongoing efforts by Asian governments to promote new multilateral trade agreements within the region and beyond are encouraging.

“Trade tensions remain a concern. If tensions escalate, they could seriously undermine consumer and investor confidence and weaken growth in the region,” he said.

“We are now taking steps to implement our Strategy 2030. We are preparing seven operational plans as well as action plans for private sector operations and knowledge management. We are also developing a new corporate results framework to measure progress in implementation.”

At the opening ceremony, Nakao unveiled six core areas ADB will prioritise in the adoption of its Strategy 2030. He stressed the importance of key areas – addressing poverty and reducing inequalities, gender equality, climate change, regional integration, private sector operations, and effective use of concessional resources.

“We will strengthen our support to the poorest and most vulnerable countries in the region including those in fragile and conflict-affected situations and many small island developing states,” he said.

“We are increasing our operations in health and education. We will develop a stronger pipeline of projects integrating gender equality designs into a wide range of operations, including transport, energy, and urban infrastructure.”

By 2030, at least 75 per cent of ADB’s operations will support mitigation and adaptation efforts, Nakao said.

“For countries that are most vulnerable to climate change, we will provide a wide range of assistance. We will also continue to foster regional cooperation and integration. Building on ADB-led subregional cooperation platforms in the Greater Mekong Subregion, Central Asia, South Asia, Southeast Asia, and the Pacific, we will further enhance regional connectivity through transport, energy, and trade facilitation,” he said.

Nakao said the lender would bring its private sector operations closer to clients by outposting more staff to resident missions. To him, ADB will open an office in Singapore by the end of this year to facilitate engagement with private sponsors and financiers.

In regard to using concessional resources, he pledged to continue the lender’s support in poverty reduction, gender equality, climate actions, and disaster prevention and responses. ADB will develop a detailed proposal for the next Asian Development Fund replenishment for grant support covering the period 2021–2024.

“We will also continue to seek strong donor support for our trust funds. We are also mobilising concessional resources from bilateral and multilateral partners including the Green Climate Fund and Global Environment Facility,” he said.

Nakao also stressed the importance of two key topics -ocean health and sustainable tourism.

“Our oceans are in danger. Increasing water temperatures, untreated wastewater and plastic pollution, and unsustainable fishing practices are all damaging the oceans,” he said.

“If we do not act now, by 2050, 90 per cent of the region’s coral reefs will be dead, and there will be no commercially exploitable wild fish stocks left.”

Last year, nearly 350 million international tourists arrived in Asia and the Pacific countries. This number has more than doubled since 2005.

“We can make tourism more human and inclusive by investing in the right skill sets of people. We must also pursue sustainable tourism by protecting nature, the environment, cultural heritage, and local communities,” he said.

“Tourism is important for job creation due to the labour-intensive nature of its services. As robotics and artificial intelligence become more common, there will be a natural desire for more human interactions and seeing real things.”

Prime Minister Voreqe Bainimarama, formally opening the ADB gathering, said Fiji would soon evolve from the hub of the South Pacific to the hub of the entire Pacific Rim.

“The world has come to us,” he said. “We are laying the groundwork to host even bigger gatherings in the years ahead by building up not only our hotels but our convention facilities.”

The premier said a new convention centre would be built with financing from the Fiji National Provident Fund with the capacity to host at least 4,500 people, putting Fiji in position to host annual meetings of the International Monetary Fund and World Bank.

“Fiji has set out a bold vision for our national progress. United in realising that future, the Fijian people have spurred our economy to 10 straight years of economic growth, a new record for Fiji,” he said.

Despite a population of just 900,000, Fiji has high potential with young people making up more than half of the total, Bainimarama pointed out.

“The Fiji of today is built by more than potential alone, far more. Our success is owed to the opportunities we have created in the lives of our people, and to our commitment to forging common identity and forming common purpose,” he said.

The nation has established direct air links to San Francisco, Los Angeles, Hong Kong, Singapore and Tokyo via Fiji Airways, which also flies to all areas of the Pacific Rim except South America, which the national carrier sees as the next frontier.

“Ten years ago, the roads from Nadi to Denarau were narrow and ageing. Telecommunications in Fiji were so underdeveloped, something like that would never have been possible,” the premier said.

Nadi International Airport “was considerably smaller” 10 years ago, he added. “It was less efficient, and you all would have been waiting a lot longer for your baggage off the plane.

“The redevelopment of that airport has not only received international acclaim, but it has been recognised as a leading green airport in the Asia Pacific region.”

Bainimarama called unity the key to greater prosperity.

“We cannot turn our backs on that proven pathway to global growth and development, especially given the present economic forecasts,” he said.

He was confident Fiji could advance to the next level of development in the near future.

“The potential [is there] to not only create prosperity but ensure that prosperity uplifts all people, from the busiest metropolises on the Asian continent to rural communities in islands across the Pacific,” he said.

The prime minister lauded the ADB’s development assistance since 1970, having secured US$524.4 million in loans, $35 million in grants and $33.7 million in technical assistance.

“We are a proud home to the ADB regional headquarters in our capital, Suva. And we are proud to host the ADB annual meeting. But Fiji’s ambition does not end with this meeting. This island is set to undergo a tremendous revival,” he said.

Some of these smaller economies are facing challenges, Nakao told a press conference at the multilateral lender’s annual meeting in Fiji.

“We should pay attention to the fiscal needs of these countries and allocate a larger amount of concessional support to smaller economies,” he said.

Last year, ADB operations continued to grow, with commitments, including loans and grants, reaching US$21.6 billion, up 10 per cent from the $19.7 billion committed in 2017. Direct value-added cofinancing deals signed last year hit a record high of $14 billion, up from $11.8 billion in 2017; disbursements also reached a record level, $14.2 billion, in 2018, some $2.7 billion more than for the previous year.

“The ADB’s total loan and grant commitments last year were $21.6 billion, compared to $13.9 billion in 2013 when I was appointed president of the ADB,” he told the press conference, held as part of the five-day annual meeting.

Nakao stressed the importance of development projects in India, as the nation is one of the largest borrowers from the ADB. In Southeast Asia, he foresees great potential for cooperation with emerging economies including Vietnam. He said the ADB had already reduced lending to China.

Nakao said the bank has been re-engaging with Thailand over the past two years ago, as the Kingdom has not borrowed from it since 2009. Thailand is still part of ADB’s core strategy, he said, hinting at the likely resumption of concessional loans for some projects in the country.

Driven by the increased number of value of projects, Nakao underscored the importance of civil society organisations. To this end, the ADB has been actively negotiating with such groups over the past few years.

Nakao said the bank has been involved in a lot of discussions on addressing key issues including income, access to finance and strengthening institutions.

“Lending is not just about money. It means we do things together and win together,” he said.

At an earlier session yesterday, Nakao unveiled the ADB’s strategy for the Pacific. He stressed the importance of youth in the development of economies around the world.

“ADB is a strong believer in the youth. We recognise that today’s youth are innovative, driven, and agile changemakers who can bring significant value to ADB’s work across the region,” he said.

“Under ADB’s new Strategy 2030, our engagement with youth has evolved from listening to their voices and dreams, to building their capacity and working with them on strengthening our operations.”

Nakao highlighted that more than 2 billion people in Asia and the Pacific are under the age of 30.

“Young leaders are truly a positive force for change in Asia and the Pacific. We have talented entrepreneurs, hi-tech innovators, teachers and changemakers, environmentalists and climate champions, athletes and artists, to name a few,” he said.

Yesterday, the ADB released its annual performance report, which showed the bank’s response to climate change and support for gender equality accelerated last year.

Last year, financing for private sector operations reached new heights, with commitments increasing by 37 per cent to $3.1 billion from $2.3 billion in 2017. Private sector operations’ share of the total signed ADB financing rose to 19.3 per cent from 13.3 per cent in 2017. Education commitments reached a record 7.5 per cent share of total commitments, according to the report.

If incumbent Prime Minister Prayut Chan-o-cha continues to lead the next government in his present capacity, the CCI is expected to rise.

Thanavath Phonvichai, director of UTCC’s Centre for Economic and Business Forecasting, said the CCI fell to 79.2 in April, the lowest since January 2018, from 80.6 in the previous month on concerns over the following issues: Slow Thai economic recovery, drops in Thai export, US-China trade war and the global economic slowdown, low growth in Thai tourism, as well as low farm income as a result of low crop prices.

“The key cause of the plunge in CCI lied in concerns over the local political situation after the election,

as reflected in the index on opinions involving the political situation which slid for a second straight month in April to its lowest level in 58 months since July 2014

Expectations sharply dropped after the election due to a lack of confidence with consumers taking a cautious approach on spending. The Thai economy is expected to post a low growth of 3.2-3.3 per cent in the first half of this year,” Thanavath said.

Meanwhile , the confidence index in April on the overall economy stood at 66.2, job opportunity at 74.6, and future income 96.7 – all down from their respective figures in March.

For the second half of this year, the centre will watch next month’s survey as the formation of the new government is crucial to a return of consumers’ confidence.

If protests occur after the new government, consumers’ confidence will slide further and the Thai economy growth could fall to 3.5 per cent this year, Thanavath said.

Ghanyapad Tantipipatpong, chairwoman of the Thai National Shippers’ Council, said the council has cut the growth forecast for this year’s export to 3 per cent, from the earlier estimate of 5 per cent.

Risks to Thai export growth extend from the global economic slowdown, higher Vietnamese export particularly to the European market, global warming which could affect agricultural produce, to the likely increase in Thailand’s daily minimum wages, on which a conclusion will be reached on May10.

The shipping council has urged the next government to promote Thailand as a centre for export and processing of agricultural products by amending trade regulations, reducing repetitive legal steps and easing approval procedures for imports of raw materials for exports, as a means to facilitate business operators. Proper zoning of farming areas should also be made, while roadshows should be accelerated to open new markets through trade negotiations.

In March this year, Thai export totalled US$21.44 billion, down 4.9 per cent year-on-year while Thai imports amounted to $19.44 billion, down 7.6 per cent. In the first three months of this year, Thai exports amounted to $61.99 billion, down 1.6 per cent year-on-year while Thai imports stood at $59.98 billion, down 1.2 per cent. As a result, Thailand enjoyed a trade surplus of $2.01 billion.

“The Commerce Ministry is maintaining its target inflation bracket for 2019 at between 0.7 and 1.7 per cent, with a mean of a 1.2 per cent rise in prices,” the director-general of the Commerce Ministry’s Trade Policy and Strategy Office, Pimchanok Vonkorpon, said after the April CPI increased 1.23 per cent year on year, down from the 1.24 per cent year-on-year expansion for March.

The CPI rose 0.44 per cent from the reading in March and by 0.86 per cent over the first four months of 2019, Pimchanok said at a press conference yesterday.

The expansion in the index is primarily due to rises in the indices for fresh food and energy.

The index for raw food increased 3.3 per cent as a result of low crop yields. This was caused by the worsening weather in the summer, with many agricultural areas in the country facing drought, Pimchanok said.

As the temperature rises, the yields of food crops such as vegetables decrease. In turn, the rate of spoilage in these fresh products increases. This lowers the supply of the products and causes price rises in the market, Pimchanok said.

However, she noted that the reduced supply of fresh food had not reached point where shortages were occurring in the market.

The index for energy rose for a second consecutive month, reaching 2.33 per cent, in line with an upward trend in world energy prices due to cuts in oil production abroad.

In a separate interview, Standard Chartered Bank economist Tim Leelahaphan cautioned that the rise in oil prices may lead to higher than expected inflation in Thailand.

“We predict that the annual average inflation level for 2019 will be 1.5 per cent, and we will have to keep a close eye on the oil price situation,” he said.

The economist concurred with Pimchanok, saying that the rising temperatures and drought in some areas would cause some perishable goods to become costlier in the next few months.

On the flipside, the prices for some types of fruit have fallen as a result of the hot weather. Plantations of some varieties have borne fruit at a faster rate, leading to increased supply and a corresponding drop in prices. The index for fruit fell by 0.5 per cent.

In prioritising Southeast Asia in its assistance, the multilateral lender would get involved in many operations in the region, said Ramesh Subramaniam, the director general of the bank’s Southeast Asia department.

Subramaniam told the ADB annual meeting yesterday that the development lender would invest around US$5 billion in its sovereign operations in the region every year, leveraging an additional $1 billion from development partners including the World Bank, Germany’s KfW and AFD, Britain’s Department for International Development, the Japan International Cooperation Agency and the Asean Infrastructure Fund.

“Our operations in Southeast Asia are quite successful. Last year, the total disbursement amounted to US$3.6 billion and nearly two-thirds of that came from policy-based loans,” he said at the event in Nadi, Fiji.

By the end of 2018, the ADB alone had invested $17.6 billion in the region. Vietnam accounts for nearly 40 per cent of the bank’s regional operations, followed by Indonesia (22 per cent) and the Philippines (19 per cent). Myanmar receives 7 per cent of the ADB’s investment in the region, while Thailand secures the smallest share at just 1 per cent.

According to Subramaniam, transport constitutes a third of the ADB’s operations in Southeast Asia, followed by energy, infrastructure services, agriculture and public sector management in rounding out the Top 5 sectors for ADB investment.

“We aim to reduce poverty in Southeast Asia through inclusive economic growth and regional integration. Our operational priorities include infrastructure projects, public sector management, finance, health, education, water management, agriculture, climate change and disaster risk management,” he said.

“We have significant engagement in many Asean countries. We have witnessed significant growth in Cambodia, Laos, Myanmar, the Philippines, and Vietnam as expected. Some of the larger economies including Singapore, Malaysia and Indonesia, to some extent, have been a bit slower.”

Driven by significant needs for development, Subramaniam foresees sustainable growth in Cambodia, Laos and Myanmar, and that growth could largely contribute to those nations’ gross domestic product. He takes pride in saying that the ADB has adopted a “nice model in a climate-friendly manner”.

Last month the lender launched the Asean Catalytic Green Finance Facility to spur more than $1 billion in green infrastructure investments across Southeast Asia. The facility provides loans and technical assistance for green infrastructure projects such as sustainable transport, clean energy, and resilient water systems.

“The ADB has committed US$1 billion in terms of financing for climate change in this region, and we will also be engaging with some other countries to reduce the use of plastics and pollution,” he said, adding that bank takes climate change into consideration in all of its projects.

In Thailand, ADB has invested only US$93 million in two projects, the lowest amount in Southeast Asia. Despite the minimal investment, Subramaniam insisted that the lender has re-engaged with projects in the transport sector, particularly in connectivity for the Greater Mekong Sub-region.

“In Thailand, we are engaging in the transport sector including railways. We are looking at a number of regional airports to improve secondary cities. It is a study under way. We are also looking at private sector projects, and [that is] still under discussion,” he said.

Subramaniam said the ADB’s budget allocation for Myanmar is “special”, as the lender aims to invest more than $420 million in its development projects there a year. The bank mainly focuses on connectivity, transport, electricity and private sector development in Myanmar.

“The two-year allocation for Myanmar is about $900 million, excluding the co-financing projects with our development partners,” he said, referring to 2019 and 2020.

“It will be continuing. In February, the ADB donors agreed to continue that special allocation, so it will go ahead until the next year.”

Subramaniam said the ADB is looking at three projects in Myanmar, and these could be approved later this year.

One of them is a $200 million project that aims to promote community-level resilience. The project will encourage the community to work together and decide what kind of infrastructure they need, and then the ADB will support them to meet their needs.

“That project has gone through internal clearances and we hope to approve it on September or October,” he said.

A further two projects include the credit guarantee facility for micro and small enterprises to improve access to finance for businesses and rural roads improvement. Subramaniam expects to approve both projects by the end of this year.

“We anticipate that we will be providing a boost to micro and small enterprises. We also use the regional facility called the Mekong Business Initiative, which aims to support a series of startups,” he said.

“Myanmar is super important for us in terms of promoting regional connectivity. We have supported two large transport connectivity projects in the East-West Economic Corridor, including in the areas bordering with Thailand. Those investments should be continuing.”

 She said these challenges could impinge on the potential growth and prosperity of countries in the so-called Asean+3 grouping, if the issues are not addressed decisively.

The grouping brings together the 10 Asean states plus China, Japan and South Korea. Many of these countries are seeking to achieve high-income or upper-middle income status in the near future.

At a seminar during the Asian Development Bank’s (ADB) annual meeting, underway in Fiji till Sunday, Chang said the region is still confronted with daunting medium- and long-term structural challenges. She stressed the importance of three key challenges – productivity, investment and regional financial architecture.

 “The key challenge at this juncture is that Asean+3 economies need to transition to the new economy,” she said. “This adds urgency to the task of addressing the structural constraints the region is facing.”

The AMRO chief urged policymakers and experts to find ways to move progressively beyond the “manufacturing for exports” strategy, embracing the new technological revolution.

While total-factor productivity accounted for about 1.5 percentage points of the approximately 7 per cent annual growth of the region between 2002 and 2007, its contribution dropped sharply in the 2011 to 2017 period.

“This trend has to be addressed urgently – at a time when the fourth industrial revolution and the new economy are transforming the workplace and changing the technological and skill intensity of products,” she said.

Despite some signs of a pick-up in recent years, investments remain well below what is needed to fulfil growth potential in the region.

Chang set a good example in infrastructure, saying: “It is clear that investment shortfalls have led to an infrastructure gap and undermined the capacity for growth.”

A few Asean+3 economies could face stresses from financial market turbulence as financial markets are characterised by volatile capital flows, she warned.

“The question is what we can do as a region to improve the resilience of developing economies to volatility shocks. A big part of this surely must be about developing and strengthening the regional financial architecture,” she said.

Chang suggested developing and deepening capital markets to recycle ample savings within the region, and strengthening the regional financial safety net.

For the next phase of economic development, the region needs to redouble its efforts to enhance capacity and cross-border connectivity in order to ensure a successful transition to the new economy, she said.

Hoe Ee Khor, chief economist at AMRO, said manufacturing and services would be transformed by the fourth industrial revolution. He urged finding out what types of capacity and connectivity are needed in the new economy.

“Going forward, they will require higher levels of technology, expertise and connectivity to deliver customised goods and services,” he said.

The organisation yesterday released its new annual flagship report on Asean+3 economies. Despite heightened global risks and stronger external headwinds, the region is expected to remain resilient, growing at only a slightly slower pace until 2020, the report says.

“While regional growth is softening from 5.3 per cent last year to 5.1 this year and 5.0 next year, the longer-term economic fundamentals remain intact,” said Khor.

“Regional policymakers should stand ready to use available policy space to ease monetary and fiscal policies to mitigate downside risks and support the economy, if external conditions were to worsen.”

He urged the region to prioritise longer-term policies, with a focus on building capacity and connectivity to leverage on the fourth industrial revolution and sustain growth in the new economy.

According to the economist, rapid economic growth in the region will generate new infrastructure demand.

“Transition to the technology-heavy and services-driven new economy could accentuate strains arising from conventional gaps the region is facing,” he said.

He urged that developing economies invest in human capital and leverage on the complementarities in the region.