Asia's economic recovery has gained momentum, but some countries will remain vulnerable to future shocks if they fail to persevere with corporate and financial reforms, according to the World Bank.
Releasing its quarterly update on the region, the bank said sound policy responses in the hardest-hit countries had resulted in a strong and rapid recovery, but a number of obstacles remained to full economic recovery.
The region's rebound could be hindered if US interest rates and oil prices continued to rise, and if Japan's economic resurgence false started, it said.
'In country after country we have seen political leaders tackle issues that formerly were taboo: cleaning up balance sheets, opening the local market to greater foreign ownership, closing unprofitable banks and increasing transparency - all these have become so commonplace now that they no longer make the front pages of newspapers,' said regional vice-president for East Asia and the Pacific, Jemal-ud-din-Kassum.
'But the reforms are by no means complete and much of the difficult policy reform and restructuring remains to be done.' As long as the corporate sector continued to carry large debts, was undercapitalised, banks retained heavy non-performing loans and public sector debt remained, large economies would find it difficult to cope with external financial shocks, the report said.
Higher interest rates would cut into current-account surpluses, while oil prices have doubled, and the future direction of US equity markets is less certain following declines since the start of the year.
The report noted that job creation had quickened and poverty was no longer on the rise.
