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ADB warns of bumpy road into 'Asian century'
by Staff Writers
Tokyo (AFP) Aug 2, 2011

Asia could be as wealthy as Europe by mid-century, but only if it tackles key challenges from inequality and corruption to climate change, an Asian Development Bank study said Tuesday.

On current trends, Asia will make up half the world's economic output by 2050, and another three billion people will have joined the ranks of the affluent, their incomes matching those of Europe today, said the report.

But the ADB study also pointed to a paradox -- the fact that the world's fastest-growing region, dubbed "Factory Asia", is still home to almost half the world's absolute poor, who earn less than $1.25 a day.

Asia's decades-long march to prosperity, the study said, is being led by seven economies with more than three billion people between them -- China, India, Indonesia, Japan, South Korea, Thailand and Malaysia.

Under the best-case scenario, Asia's combined GDP -- also including poorer nations such as Laos and Pakistan -- will rise from $17 trillion last year to $174 trillion in 2050, with per capita GDP of $40,800 in current terms.

But in order for Asia's rise to be sustainable, the study warns, the diverse region must emulate the past successes of top performers Japan, South Korea and Singapore by promoting inclusive and equitable growth.

"Asia is in the midst of a historic transformation," said the report, "Asia 2050: Realizing the Asian Century", commissioned by the Manila-based ADB and launched by its president Haruhiko Kuroda in Tokyo.

Kuroda pointed out that developing Asia has led the way out of the global financial crisis and recession with a V-shaped recovery.

On current trends, the study said, "by 2050 its per capita income could rise sixfold in purchasing power parity terms to reach Europes levels today. It would make some three billion additional Asians affluent by current standards.

"By nearly doubling its share of global gross domestic product to 52 percent by 2050, Asia would regain the dominant economic position it held some 300 years ago, before the industrial revolution."

However, the study warned that Asia's rise is by no means inevitable.

"Many see the ascendancy of Asia -- or 'the Asian Century' -- as being on autopilot, with the region gliding smoothly to its rightful place in destiny," wrote Kuroda in a foreword to the report.

"But complacency would be a mistake. While an Asian century is certainly plausible, it is not preordained."

The report warned that emerging economies face the risk of being stuck in the "middle-income trap" as bursts of rapid growth, driven by export-based manufacturing, are followed by periods of stagnation or decline.

The report highlights other key challenges -- rising inequality within and between countries, poor governance and corruption in many of them, and intensifying regional competition for finite natural resources.

In the worst case, it warned, Asia could face "a perfect storm" of bad macro-economic policies, unchecked financial sector exuberance, conflict, climate change, natural disasters, changing demography and weak governance.

To make Asian growth sustainable, the study said, its countries must address poverty, equality of access and opportunity, and focus on education, entrepreneurship, innovation and technological development.

Climate change is "a wild card for Asian development", warned the study, which stressed that Asia is already hit by more storms, floods and other natural disasters than any other region.

Global warming threatens to melt the glaciers that run from the Himalayas and other mountain ranges to feed Asia's major rivers, which provide water, food, fish and power for 2.8 billion people, it said.

"Climate change will affect everyone. With over half the world's population, Asia has more at stake than any other region," said the study.

"The anticipated affluence of some three billion additional Asians will put tremendous pressure on the earth's finite natural resources.

"Out of self-interest," said the study, Asia "will need to take the lead in radical energy efficiency and diversification programmes by switching from fossil fuels to renewable energy."

Launching the report, Kuroda said: "How we handle vital resources such as water and food will determine whether we stay on the path of economic growth and development, or stumble into conflicts of scarcity.

"Asia must take radical steps now toward investing in innovation and clean technology to ensure that our quest for prosperity for all does not end in environmental gridlock."

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HSBC to hire 15,000 in emerging markets
Hong Kong (AFP) Aug 2, 2011 - Global banking giant HSBC said Tuesday it would hire thousands of people in emerging markets by 2014 as it looked particularly to Asia's booming financial sector to power future growth.

"We are planning to hire up to 15,000 people in emerging markets over the next three years," the bank's Chief Executive Stuart Gulliver told a press briefing in Hong Kong Tuesday.

His comments come a day after the British-based lender announced that it would axe 30,000 jobs by 2013, about 10 percent of its global workforce, as it looked to slash costs.

It said the initial round of 5,000 job cuts would be in the United States, Britain, France, Latin America and the Middle East.

More than a third of HSBC's current workforce of 300,000 are already in Asia, and the firm said Tuesday its prospects in the region were expected to continue improving.

Asia contributed 59 percent of the group's pre-tax profits in the first six months of 2011, up 16 percent from the same period last year, while net fee income grew 17 percent in the region year-on-year, it said.

HSBC has already added 3,000 jobs in Asia during the first half of this year, with plans for some of the 15,000 new positions to be located in Brazil, Argentina, and Mexico, Gulliver said.

The new jobs were a "re-allocation of resources", said Peter Wong, chief executive of HSBC Asia-Pacific.

"Asia is a growth story -- the world is moving from the west to the east."

Wong said he expected Asia's sizzling economic growth to hit 7.5 percent this year, and 7.6 percent in 2012, with China expected to grow 8.9 percent in 2011.

The lender planned to continue boosting its position as a leading issuer in offshore bonds denominated in China's currency, the renminbi, he added.

Beijing has been using Hong Kong -- a semi-autonomous Chinese territory -- as a test bed to internationalise the renminbi, with an eye to challenging the US dollar's dominance as a global currency.

Daniel Tabbush, the Bangkok-based head of brokerage CLSA's banks research, said the British lender's continuing focus on Asia highlighted the lacklustre prospects for growth in the West.

"It's very clear the (job cuts) are concentrated in the OECD (Organisation for Economic Co-operation and Development) economies," Tabbush told AFP, referring to the group of 34 member countries based mainly in Europe.

"It makes sense they would be hiring in Asia and focusing on commercial banking -- that is where all the growth is."

Tabbush added that there was "probably enough demand for 10 banks" in corporate banking across the region, which meant HSBC could be picky when it came to doing business with borrowers who had the best credit.

Shares in HSBC closed 1.2 percent higher on Tuesday in Hong Kong at HK$77.9 ($10) as the broader Hang Seng Index ended 1.07 percent lower.

HSBC's latest plans come after the banking giant -- which survived the 2008 crisis without state aid, unlike many of its rivals -- announced in a strategic review this year plans to save $2.5-3.5 billion in costs by 2013.

The bank said on Monday that its net profit soared to $8.9 billion (6.2 billion euros) in the first half on lower bad debt and tax charges.

Pre-tax profits rose 3.3 percent to $370 million compared with the first six months of 2010, while total revenues edged ahead to $35.7 billion.

The bank also unveiled plans on Sunday to sell 195 retail branches, primarily in upstate New York, to First Niagara Bank for an estimated $1 billion.

HSBC was founded in Hong Kong and Shanghai in 1865, although it remains headquartered in London.

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HSBC axes 30,000 jobs in cost-cutting drive
London (AFP) Aug 1, 2011
HSBC will slash 30,000 jobs worldwide over the next two years as it looks to slash costs, the global banking giant announced Monday after also unveiling bumper profits. Europe's biggest lender said in a statement that it was cutting 5,000 workers in Latin America, the United States, Britain, France and the Middle East while new boss Stuart Gulliver revealed that the cost-cutting plans would ... read more

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