It’s not just China that is booming, the rest of Asia is also showing steady progress, while developing nations have their own obstacles to overcome, they are distinctly different from the issues of more developed economies, says Nakao.
Takehiko Nakao, the president of Asian Development Bank (ADB), talks to Biz@India about refocusing attention on Asia, not just China, but the entirety of the continent.
As the head of India for ADB what is the feeling you gather in Davos 2017 about the economic situation of the world?
There are a lot of concerns regarding the consequences of the American election. There is also concern pertaining to Brexit, while there is an interest to see how China progresses. My feeling is that, in a sense, these issues are discussed so intensively, without paying enough attention to the other elements of the world economy. One such example is the very strong growth of India, and after demonetisation, there was some volatility, problems, and challenges, but overall Prime Minister Modi’s reform is impressive. I met him a few times, and I am impressed by his commitment to the reforms. Also Bangladesh, Vietnam, Myanmar, and Cambodia, these countries are growing very fast. Indonesia is growing very solidly. So Asia as a whole is growing, and it’s not just about China.
How do you see the role of the banks that had been setup by China and the BRICS (Brazil, Russia, India, China and South Africa)? Is there competition or conflict between them and ADB?
I’ll say it’s a complementary role. I met with the Chinese President Xi Jinping nine times in the last two years, and I met Modi several times, and we have already approved two co-financing projects. One is a road project in Pakistan and the other is a natural gas project in Bangladesh. We also do some work in public health and education, although our major portion is still in infrastructure. Thus, we are very complementary; we have no competition, and no reason to be hostile.
How is Japanese and Korean economy expected to perform this year?
Japan’s productive age population is now declining, but it still maintains the GDP, so that is a great achievement. Japanese society is in a sense, more moderate, even compared to peak of Japanese economy of 1990. But the problem there is some inequality between regular workers and irregular workers. Japan has a challenge, and it is not as dynamic or booming as India or China today. It is still very stable and has a strong demand. For instance, China is the biggest car market, but we have a very strong demand in India, China and Indonesia. People want to have air conditioning, they want to have bikes or cars. Thus Asia can grow on its own.
Do you think President Trump’s announcements on protectionism will hurt Asia?
It is too early to say what the policy of Trump is – if the message is to increase the national interest of US, they should engage in trade, investment and in other elements with Asia.
Do you think inequality in Asia is growing?
In developing countries I would say it’s now better in overall growth of people, absolute poverty hasn’t been reduced but of course, there are super rich people in India. The best way to bridge the gap is to ensure good public education and public health – those are important. In advanced economies it is more complicated. Because of trades and investment, the wages of factory workers are stunted. And the people who are engaged in global ideas and so on are richer.
Can ADB play a role in boosting equality?
It’s not easy. But we can still provide good technical assistance, policy advices about redistribution; rural, agricultural and infrastructural development; which help enhance the life of each segment of the society.