The ADB this year has urged developing countries to engage in South-South linkages to rebuild and strengthen their ties.
The expanding South-South links will present a supplementary growth source, ADB Country Director Sri Lanka, Dr. Richard Vokes told the media last week.
This has been highlighted in the new ADB report’s special chapter titled “South-South Links” where a sharp rise in trade and investment among developing economies in the South, including developing Asia, Africa, Latin America and the Middle East have been noted.
Asia’s recovery was firm with growth nearing 8% in the next two years and the region was leading for a global recovery as well.
The risks of oil and food impact on industrialized economies in addition to North Africa and Middle East crisis are set to affect the economies while many countries still depend on exports to the US due to which demand there is crucial.
Developing Asia witnessed a bounce back in 2010 from low growth in 2009 with China and India accounting for this.
South-South trade has increased but this needs to be encouraged and reduce tariff barriers with 7% in non fuel items to 17%.
ADB view in this respect, is that developing Asia and others must focus on linkages and rebalance growth.
Dr. Vokes pointed out that more stable and diversified the economies are it will be steadier.
The report notes that promoting growth in the South will create an alternative source of demand for goods and services from Asia, offsetting a reduction in demand from recession-hit developed economies. Closer Southern links will also stimulate greater demand for products and services from the North.