BRICS New Development Bank positive on Asian economies

Annual reports from the Boao Forum for Asia say that Asia remains competitive in creativity, tech innovation and economic openness.Some are concerned whetherAsia can keep its competitivenessin face ofglobal volatility, butLeslie Maasdorp, vice president of the BRICS New Development Bankis bullish on the momentum of Asianeconomies.

“There is no question as the reports suggested. Asia right now is and will continue to be a significant growth engine in the world economy,”he told CGTN.

He mentioned that, inadditiontotraditionalgrowth engines, the openness of the economy, application of newtechnologyas well as innovation become the new sources of growth in Asia.

Leslie Maasdorp, vice president of the BRICS New Development Bank. /CGTN Photo

2018 witnessed some serious currency depreciation in emerging economies,between 10 and 40 percent against theU.S.dollar.Maasdorpsaid that it's fundamentallybecauseof a strong U.S. dollar, not a domestic problem.

"Emerging markets suffer from the direct impact of the movement in the U.S. interest rate.If the U.S. dollar rises, it directly leads to the reversing capital flows out of the emerging markets.So many of the emerging markets, like Brazil, South Africa and Turkey, suffer from this,"he explained.

"Let's take Turkey as an example. The impact of thatsignificantdepreciation in the Lira has taken huge and immediate effect on other emerging markets,"he added.

He noted that for Asian economies or any other emerging market, the key thing is toinsulate from anyextremenessof globalvolatility."You can do this in a number of ways.One way is to have strong savings and investment rate, which is Asian economies have,"he said.

He also said that other emerging markets are not so fortunate as theirinvestmentflows areinfluencedby external volatility. And he thought commodity-based economies are more easily affected by externalfactorsas they are pricing commodities in U.S. dollars.

As the U.S.Fed signals no rate hike for 2019,he believed thatdepreciation pressurewould be absolutely eased."A stable U.S. interest ratethatis predictable for the future should provide a better environment forinvestmentdecision,"he stressed, projecting that emerging economies woulddevelopin a more stable andpredictableenvironment.