Asian Development Bank

Fed's Liftoff 'Will Free Asian Tigers'

Vietnam is one of the Asia's new booming powerhouses. Source: Corbis.
Vietnam is one of the Asia's new booming powerhouses.
  • Why it matters

    Why it matters

    Mr. Wei doesn’t share the fears of many economists that Asian growth will suffer when the U.S. Federal Reserve eventually raises interest rates.

  • Facts

    Facts

    • The Federal Reserve set its benchmark interest rate close to zero nearly seven years ago.
    • But with the U.S. economy firmly in a recovery, many expect a rate hike by the end of the year.
    • The last time the Fed raised interest rates was in 2006. Many expect the raise to have far-reaching effects.
  • Audio

    Audio

  • Pdf

These are uncertain times for Asia. China’s growth is slowing, while the specter of an interest-rate increase by the U.S. Federal Reserve has many worried that investors could begin to limit funds flowing into Asian nations.

Shang-Jin Wei is not worried by the prospect of a U.S. interest rate hike and rejects predictions of a second Asian crisis when the time comes. On the contrary, the chief economist of the Asian Development Bank told Handelsblatt the rate change will kick-start a recovery in the region.

Handelsblatt: Mr. Wei, the world economy faces an imminent rise in interest rates in the United States, cooling off in China and insecure growth prospects in industrial countries. Despite this, in the coming year you expect growth to accelerate again in the emerging markets. Why?

Shang-Jin Wei: In some countries we see positive structural reforms. Take Indonesia, for example, the biggest economy in Southeast Asia: The government‘s initiatives to expand infrastructure should slowly but surely generate growth. We also think that the downward pressure on the Chinese economy is decreasing. One of the reasons for this is that demand in the industrial states is coming back.

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