Surging growth and Asia

Asia has two economic giants - China and India. Their main trading partner is Asia itself. Most Asian countries rely heavily on these two countries for the bulk of their imports.

However, the United Nations says Asian countries must stop relying on imports by rising giants China and India. Urging a long-term strategy of stepped-up diversification for Asia, the UN's Conference on Trade and Development (UNCTAD) says the developed world should not to take protectionist measures to support their economies at the expense of developing nations.

As the UN says "the windfall profits being reaped by many developing countries as a result of surging economic growth in India and China should be used to diversify those countries' economies and prepare them for more stable economic development in the future".

The agency's annual Trade and Development Report released in Bangkok said the East and South Asian region was well established as a "new growth pole" for the world economy, mostly because of progress achieved by India and China.

Indeed, China and India are spearheading Asian economic growth. The Asian Development Bank (ADB) president Harukiko Kuroda has said China and India will help pull the rest of Asia to forecast average growth of 6.5 percent this year. He said the growth may even pick up further in 2006 and 2007.

Sri Lanka too relies on imports from China and India, but thanks to the Indo-Lanka Free Trade Agreement, our exports to India have been increasing. More goods are also being exported to China. We need to diversify our exports to these two countries, who have always been our friends in the economic and diplomatic spheres. The possibility of exporting new products, apart from the traditional ones, must be explored.

Tourism too is an important component of Asian growth. As far as Sri Lanka is concerned, India has already become the number one tourism market. More Chinese tourists are visiting Sri Lanka, particularly after a Chinese actress was appointed Sri Lanka's tourism ambassador. Travel within Asia by Asians is predicted to grow substantially over the coming years, fuelling the economic boom.

However, Asia's economic resurgence could take a battering from the surge in oil prices which have surpassed US$ 70 a barrel in the wake of Hurricane Katrina. Again, India and China likely to fare better than other Asian economies. The December 26 tsunami also compounded the economic woes of many Indian Ocean coastal States and the recovery will take several years.

However, signs of an economic recovery in Japan and projections for an economic rebound in Europe in the second half are likely to cushion the impact of higher oil prices.

Nevertheless, the international community, especially the more affluent countries, must play a more active role in this regard. They should review and improve mechanisms for reducing prices for a wide range of commodities including oil.

Both developed and developing worlds must also ensure that trade takes the upper hand, as opposed to aid.

The Doha Round of World Trade Organisation negotiations, currently in stalemate, should succeed if developing countries are to reap significant gains through trade. A more equitable trading regime will help both developing and developed countries to achieve faster economic growth.