'Asia must open up': ADB president says world won't return to pre-Trump era

Business Standard

a day ago

Asian economies must embrace openness and reform like never before, Masato Kanda, president of the Asian Development Bank (ADB) said in an interview with Nikkei.
The former Japanese currency chief took charge of the Manila-headquartered multilateral lender in February, shortly after Donald Trump returned to the White House for a second term—an event Kanda described as having 'completely changed the world'.
Since taking office, Kanda has held discussions with leaders including Prime Minister Narendra Modi, Chinese Premier Li Qiang, and Italian Prime Minister Giorgia Meloni. 'Those leaders all agree that we must use this crisis as an opportunity for reform to build more resilient domestic and regional economies,' he said.
'There will never be a return to a world before Trump,' Kanda said, stressing that Asian economies must diversify away from over-reliance on the US market and global supply chains. 'Strengthening the domestic markets of Asian countries and regions is an important task.'
$10 billion investment in Asean grid, Indian metros
To support regional resilience and integration, the ADB has pledged up to $10 billion for the Asean Power Grid—an initiative aimed at enhancing cross-border electricity connectivity and energy security in Southeast Asia.
Kanda also confirmed the bank's proposal to invest another $10 billion in urban infrastructure projects across India, including metro systems.
'You don't see such a project at that scale in other regions,' he noted, citing India's demographic dividend and its rising role as a regional investment hub.
Beyond 'China plus one'
While global supply chains have already begun shifting away from China, Kanda cautioned that Southeast Asia, previously buoyed by the 'China Plus One' strategy, is now itself vulnerable, particularly under the weight of fresh US trade barriers.
'The concept still holds, but it must evolve,' he said. 'Diversification must extend beyond final goods markets to include raw material sources and intermediate suppliers.'
Asia must not turn inward: ADB president
Kanda warned that in the face of growing protectionism in the West, Asia cannot afford to become inward-looking. He urged countries in the region to deepen trade integration not just within Asia but with Europe as well.
Speaking on the sidelines of the ADB's annual meeting in Italy earlier this year, Kanda said European leaders had expressed strong interest in strengthening economic ties with Asia, which they view as the world's primary growth engine.
'Reform momentum is building across Asia,' he said, highlighting efforts by regional leaders to dismantle structural barriers such as land-use restrictions and capital controls. 'They understand that survival cannot come from relying on gimmicks.'
Kanda also called for prudent macroeconomic policies, warning that without sustainable public finances and a normalised monetary stance, governments may lack the flexibility to respond to future crises.
US relations and China lending
Despite political changes in Washington, the ADB maintains what Kanda described as a "constructive relationship" with the United States. He pointed to the bank's ability to increase lending by 50 per cent since 2009 without expanding its capital base, calling it an efficient use of donor funds.
On US pressure to halt lending to China, Kanda said discussions were ongoing among shareholders. Current ADB loans to China have declined sharply and are now focused on global public goods such as environmental sustainability and biodiversity.
ADB trims India forecast amid US tariff pressure
The ADB's latest Asian Development Outlook, released last week, revised India's GDP growth forecast for the financial year 2025–26 (FY26) down to 6.5 per cent from the previous 6.7 per cent, citing the impact of US tariff policy and broader global slowdown. Despite this downward revision, the ADB noted that India remains one of the fastest-growing major economies globally.
'This revision is primarily due to the impact of US baseline tariffs and associated policy uncertainty,' the report said. It warned that beyond lower export demand, investment flows may also be affected by heightened uncertainty.
Inflation forecasts have also been revised downward to 3.8 per cent for FY26, following a faster-than-expected decline in food prices.