Expansionary monetary policy positive for global economy: ADB chief

Asian Development Bank President Takehiko Nakao said Thursday that the monetary easing policies of developed countries will have a positive effect on the global economy, shrugging off concerns that adverse spillovers would hit emerging economies.

Negative spillover effects, including massive fund inflows and asset bubbles, in emerging economies have been "limited" and the global economic situation "would have been worse" without the credit easing conducted by countries such as Japan and the United States, Nakao said at a press conference in Greater Noida on the outskirts of New Delhi, ahead of the ADB's two-day annual meeting starting Saturday.

"I really believe that expansionary monetary policies are needed and...should have positive implications for the global economy, including emerging economies," he said.

Nakao, a former top Japanese financial diplomat, also said that Japan's recent bold monetary easing is not targeted at lowering the yen against other major currencies to boost the country's competitiveness, and it is just a "correction" of the Japanese currency's historic rise last year.

As for the Asian economy, Nakao said he sees a great possibility for further economic growth in the region down the road supported by strong domestic demand, despite signs of a slowdown last year in countries such as China and India.

"I want to emphasize that Asian economic growth has been more robust and resilient" than expected, he said.

The ADB is projecting that developing economies in Asia will expand 6.6 percent this year and 6.7 percent in 2014, up from 6.1 percent in 2012. China's economy, the world's growth engine, is expected to expand 8.2 percent in 2013 from 7.8 percent in 2012.

Nakao noted the importance of promoting infrastructure building in emerging Asian countries for the development of the region's economy, saying there is "a tremendous need" for the ADB to aid such projects, while adding that the institution's financial capacity for infrastructure building is limited.

He added the ADB will focus for the time being on maintaining rather than increasing its current lending level.

The 46th annual meeting of the ADB will be the first major event for Nakao, who took the helm of the institution on April 28.

Since its establishment in 1966, a Japanese nominee has traditionally been chosen to head the 67-member regional lender, the voting rights of which are allocated in proportion to members' contributions.

Nakao, the ADB's ninth president, said Japan's monopoly on the post of ADB chief does not hinder fairness and transparency in the election process, adding other member countries recognize Japan's significant contribution to the ADB.

Japan and the United States are the two largest ADB capital holders.