On January 27, the Bretton Woods Committee hosted its first virtual conference, Windows Into the IFIs: The Outlook for Economic Growth and Investment in Asia. The event featured remarks from Joseph E. Zveglich, Director of the Macroeconomics Research Division of the Asian Development Bank on the ADB's recently released report, Asian Development Outlook Supplement: Growth Hesitates in Developing Asia. Sir David Wright, Vice Chairman at Barclays, offered follow-up commentary and questions. The discussion was facilitated by Randy Rodgers, Executive Director of the Bretton Woods Committee.
Dr. Zveglich emphasized that growth rates in the developing parts of Asia (all countries in the region except Japan) lost momentum in late 2014 and are not expected to rise dramatically in 2015. However, some countries in the region, particularly Papua New Guinea (who looks to export liquefied natural gases in 2015), are poised for large growth in the coming year. Growth prospects beyond 2015 will be influenced strongly by the pace of planned reforms, a topic that has been discussed widely in the press due to U.S. President Obama’s recent visit with Indian Prime Minister Modi. Zveglich also spoke to the unlikeliness of a taper tantrum as the U.S. ponders raising interest rates, saying that Asia seems to have already adjusted for this.
Sir David Wright followed up by highlighting the anticipation that global markets have for Modi’s India and the mixed impacts of the fall in oil prices. While low oil prices work against the drive for environmentally sustainable growth, the depreciating currency should provide a boon for manufacturing exporters. Chinese rebalancing was also discussed, as the country attempts to move from an investment to consumption-driven economy. Care must be taken during this transition, particularly in light of the complexity involved with unwinding the shadow banking sector without affecting the housing market. On a positive concluding note, Sir David discussed the improved second-tier diplomatic relations among countries in northeast Asia (Japan, China and South Korea).