Singapore, 10th April 2025.
In his presentation at the United Nations Asia-Pacific Business Forum held in Kuala Lumpur, Malaysia on 10th April 2025, Rajiv Biswas, CEO of Asia-Pacific Economics, a macroeconomics research group, highlighted a range of key financial instruments critical for mobilizing private capital flows to meet the large development financing gap confronting developing countries.
“According to United Nations and OECD estimates, developing countries face a current USD 4 trillion annual financing gap each year, a gap which is widening,” said Rajiv Biswas, CEO of Asia-Pacific Economics. “The global economic shockwaves to world financial markets due to the steep new tariff rates announced by the Trump Administration on many countries worldwide have made this development financing challenge even greater. Many private sector fund managers currently confront significant turmoil in global equities, currencies and fixed income markets, making it harder to mobilize new private sector financing flows for development finance.” Said Rajiv Biswas.
“Mobilizing greater private sector foreign direct investment (FDI) flows for developing countries will be one important pathway to boosting long-term private financing flows for developing nations,” said Rajiv Biswas. “The Asia-Pacific region already receives the lion’s share of total foreign direct investment to developing countries, accounting for an estimated USD 620 billion out of total flows to developing countries worldwide of USD 870 billion in 2023. However, the direction of flows is heavily concentrated towards Asia’s largest developing nations, notably China and India. A key focus in the decade ahead will need to be on boosting foreign direct investment to the most vulnerable developing nations, notably the Small Island Developing States, the Least Developed Countries and the Land-Locked Developing Countries.” said Rajiv Biswas.
“Other mechanisms for boosting private capital flows for development financing will also be critical, notably innovative new instruments for diaspora financing from the estimated 300 million workers from developing countries working abroad and remitting money back home,” said Rajiv Biswas. “The Asia-Pacific region is the largest recipient of remittance inflows globally at around USD 330 billion. Remittances to APAC low and middle income nations are at similar levels to total FDI inflows. As a share of GDP, the five APAC countries with the highest remittance receipts are Tonga, Samoa, Nepal, Vanuatu, and the Marshall Islands. However, remittance flows to large Asian developing economies such as India, Philippines and Bangladesh are also a key contributor to overall external financing flows.”
“With the global trading system and world financial markets in turmoil due to the Trump 2.0 tariffs, Asia-Pacific nations will need to work closely together as a matter of highest policy priority to boost intra-Asian regional trade flows and mobilize developing financing flows amongst Asia-Pacific nations,” said Rajiv Biswas. “Boosting South-South trade and investment flows has also become a key priority, to increase Asian trade and investment flows with other developing nations worldwide as the world economy confronts resurgent trade protectionism in the world’s largest economy.”
Note to Media: Please feel free to quote with attribution to Rajiv Biswas, CEO, Asia-Pacific Economics.
Asia-Pacific Economics is an economic research group which provides geopolitical and macroeconomic forecasts for the global and Asia-Pacific economies.