Asia 'must cut export dependency'

Asian governments must cut reliance on export-driven growth and spend more to cut poverty, Asian Development Bank (ADB) finance officials have said.

Countries must restructure to focus on domestic demand as they grapple with economic chaos, the banks' annual meeting in Indonesia was told.

Asian economies are slumping as demand for their products falls during the worst global slump since World War II.

The downturn is set to keep tens of millions of people trapped in poverty.

Also at the meeting, Japan, said it would make 6 trillion yen ($40.1bn; $60.5bn) available for currency swaps - giving nations with weaker currencies access to yen in a funding crisis.

And finance ministers from south east Asia along with Japan, China and South Korea, agreed to set up a $120bn (£80.5bn) pool of emergency funds.

'Greater resilience'

Asia's main export markets had experienced a "massive contraction in demand" since the implosion of the US mortgage market triggered the global banking crisis last year, ADB President Haruhiko Kuroda told a seminar at the meeting.

He said the knock-on effects had been interest rates on bonds rising and Asian currencies depreciating as foreign capital was taken out of emerging markets.

Economic stimulus packages produced by the likes of China and Japan to boost their economies would not be sufficient in the long-term he added.

"Over the longer term, developing Asia is starting the process of rebalancing growth from excessive dependence on external demand to greater resilience on both consumption and investment," he said.

"Already there are signs that domestic consumption is remaining strong in Asia and may well lead the way out of this downturn."

The ADB is predicting growth of 3.4% in Asia for 2009 compared with more than 9% in 2007.

Poverty warning

Chinese and Indian finance officials were among those backing Mr Kuroda's calls for efforts to stimulate domestic consumption.

Greater spending on infrastructure and education were needed, they said, as well as social safety nets to give Asian consumers, especially the poor, the confidence to spend.

The ADB's main role is lending to alleviate poverty in developing Asian nations.

But it estimates that the economic crisis has kept about 60 million Asian people in severe poverty, who, in less uncertain global economic times, would have been able to improve their standards of living.