Intra-regional trade is intensifying in Asia, and the region can protect this trend by forging stronger ties in the face of shifting relations between Asian countries and the changing global economic landscape, says the Asian Development Bank’s (ADB) latest “Asian Economic Integration Monitor.”
“Asia needs stronger cooperation now more than ever,” said Iwan Azis, head of ADB’s Office of Regional Economic Integration. “Regional trade and financial integration have ratcheted up over the past decade and closer cooperation is needed to counter geopolitical risks while surveillance and financial safety nets can address contagion.”
Asia’s intra-regional trade share has risen to about 54 percent in recent years and into early 2013, with trade between subregions rising, particularly for Central Asia as well as the Pacific. Asia-Pacific’s trade share with other emerging markets outside the region continues to ris, while the trade share with the U.S. and Japan continues to decline.
Southeast Asian nations are attracting more foreign direct investment from within the region and from East Asia, strengthening production networks as the region gears up for the establishment of the ASEAN Economic Community at end 2015. For example, businesses from Japan, the biggest foreign investor in Southeast Asia, are increasingly shifting their production chains to the region.
As well as closer forms of economic cooperation, the region urgently needs to improve its insurance and other disaster-risk financing to address the high human and economic toll of floods, droughts, and other increasingly common natural disasters that have cross-border impacts.
The Asia-Pacific is more vulnerable to natural hazards than any other region in the world, with financial costs alone totaling about $53 billion annually over the last 20 years. However, in 2013 only 7.6 percent of those economic losses were insured, so costs are threatening to outstrip governments’ ability to finance recovery. Long-term damage to infrastructure, businesses, farms, and homes can push many back into poverty.
Key priorities for developing disaster risk financing markets and strengthening financial resilience include business continuity planning, enhanced technical and institutional capabilities, and better coordination among public authorities.
Photo: Marufish
