By Stephen Coates

NUSA DUA, May 04, 2009 (AFP) - The Asian Development Bank (ADB) called Monday for a fundamental "rebalancing" of regional economies in response to the global crisis, as regional markets soared amid hopes of recovery.

Bank President Haruhiko Kuroda said the region would record only 3.4 percent growth this year but could expect a "mild recovery" of around 6.0 percent growth in 2010.

"With strong national and regional efforts and a mild recovery expected in the global economy next year, developing Asia and the Pacific should bounce back to about 6.0 percent growth in 2010," he said.

"These are positive signs, therefore this should not be a time of despair," he added as he opened the ADB's board of governors annual meeting in Bali.

Asian sharemarkets rallied strongly Monday on the back of improving indicators across the region and gains on Wall Street suggesting the US economy may be turning the corner.

"Our economist thinks that Asia has passed the worst of the economic contraction," DBS Vickers strategist Yeo Kee Yan told Dow Jones Newswires in Singapore, where shares approached seven-month highs.

Kuroda outlined a huge expansion in the ADB's lending plans after shareholders agreed last week to triple the bank's capital base in response to the global downturn.

The bank will increase its overall lending assistance to the region's poorest countries by more than 10 billion dollars in 2009 and 2010, including three billion to meet "urgent needs stemming from the crisis," he said.

Some of that new lending would aim to help Asian economies adjust to plunging demand for their exports to markets such as Europe and the United States.

"The transfer of savings from one part of the world to another worked well when advanced economies could absorb production from developing economies, but the current state of the global economy suggests that era has passed," Kuroda said.

"By rebalancing export-driven growth with a greater reliance on domestic demand and consumption, Asia can lead the way in charting a new, globally beneficial development course."

Recent economic data have raised hopes that China could lead the world out of the crisis, providing new growth momentum for its trading partners across the region. Chinese shares closed up 3.32 percent on Monday.

China's 1,624 listed companies posted a combined net profit of 203.8 billion in the first three months of this year, a fourfold improvement over the fourth quarter, the official Xinhua news agency reported.

Japan's factory output rose 1.6 percent in March from the previous month, the first increase since September, triggering a buying spree on the Japanese stock market which climbed nearly four percent.

In India, shares climbed more than 5.5 percent during Monday trade, crossing the 12,000-point level to a near seven-month peak.

"We have crossed key levels so the momentum is strong," Mumbai brokerage Sharekhan analyst Gaurav Dua said.

Kuroda also called for changes to the global financial architecture to give voice to the aspirations of Asia, where powerhouses like China and India are emerging as rivals to US domination of the world economy.

Ten Asian countries plus China, Japan and South Korea agreed Sunday to set up a 120-billion-dollar regional emergency fund to help Asian economies out of crises, a move Kuroda applauded.

"It is... important to create a financial architecture that gives developing countries a voice more commensurate with their share of world output and trade," he said.

His comments echoed China's calls for a greater say in international economic decision-making at institutions such as the IMF.

Indonesian President Susilo Bambang Yudhoyono said "precautionary mechanisms" like the regional liquidity fund were necessary to "ensure foreign exchange stability and confidence" in crisis-hit local currencies.

But he warned that mounting poverty and climate change, if unchecked, could lead to "social and political unrest in many countries."

smc/elw

Copyright AFP 2009.