Financial crisis in Europe could escalate and along with slow recovery in the US, this year will be crucial for global economy but Asian nations must continue long term structural reforms while insulating the region against the troubles, ADB said today. 

"While authorities continue to strengthen macroeconomic resilience to shocks, we also need to reinvigorate focus on the region's long-term development goals," ADB President Haruhiko Kuroda said at the Governors' Seminar this morning. 

"The ultimate challenge is to continue transforming economies in a way that promotes peoples' welfare and reduces poverty," he added.  Meanwhile, an ADB report presented at the seminar said this year could prove crucial for the global economy as financial tensions in Europe could escalate further and there remains concern over fledgling economic recovery in the US. 

Against this backdrop, the region must update its growth model to accommodate a 'new normal' -- prolonged restructuring in advanced economies - and surmount obstacles to sustained and equitable growth in Asia, the report said. 

The global economic crisis is a wake-up call for Asia and policymakers have to boost Asia's resilience to external shocks in the near-term and also tackle the risks posed by ongoing global rebalancing and overall structural transformation, said the report. 

Currently, the national focus is on containing crisis, risks from potential financial contagion and weaker trade, said the report -- How Can Asia Respond to Global Economic Crisis and Transformation. 

Asia can weather a renewed financial crisis and weakened export demand from developed markets, but long-term prosperity hinges on relying more on domestic and regional markets as well as expanding ties with Latin America and Africa, it said. 

The Asian Development Bank is holding 45th Annual Meeting of ADB's Board of Governors here. Finance Minister Pranab Mukherjee will attend the meet which will discuss the global economic problems and deliberate on steps to promote growth and improve governance. (Times of India)