IMF’s first deputy managing director John Lipsky warned at an international gathering in Hanoi to discuss post-crisis growth and poverty reduction in Asia that the continent’s developing economies must invest more in infrastructure and social welfare to promote long-term growth in a region where millions fell back into poverty during the global economic crisis.

The IMF official said on Monday that, despite general macroeconomic stability, some threats remain and financial sector soundness must be further improved as a recovery takes hold.

While Asia is helping lead the world toward stronger growth after the global crisis that began in 2008, the region’s developing economies face key policy challenges.

He reported that the recent crisis pushed an estimated 14 million people back into poverty in Asia where “agricultural poverty remains a particular problem, partly reflecting a widening gap between urban and rural income.”

He noted that some Asian developing nations face large fiscal deficits and public debt, high credit growth and inflation and low international reserves, stressing that it is important to rebuild policy buffers and to further improve financial sector soundness, calling for structural reforms to help raise developing Asia’s global competitiveness and integration into trade networks.

John Lipsky cited Asian Development Bank figures that show Asia-Pacific countries need to invest up to eight trillion dollars over the next decade to cover a still large infrastructure gaps in developing Asian countries, especially in areas such as transport, energy and communications. According to him “such investments would not only boost productive potential but also would help to fight poverty, including in rural areas.”

Moreover, he said that social safety nets should be strengthened to protect the poor and vulnerable and to raise access to basic public services including healthcare.

The IMF first deputy managing director expects global growth to reach about 4% this year, and the economies of “emerging Asia” are forecast to expand by 8.5%, led by China and India. Meanwhile Director of the IMF’s Asia-Pacific department Anoop Singh said the region’s eight low-income countries of Mongolia, Bangladesh, Cambodia, Laos, Nepal, Papua New Guinea, Sri Lanka and Vietnam should see growth rebound to about 6% over the next two years.

A. Singh said they have to be careful to ensure that inflation in these countries - seemingly driven by food and fuel prices - does not feed into broader price pressures in the economy  

Singh also pointed out that the eight collectively have a deficit in their current account, which measures trade and financial transfers, and according to him, the main focus is “to make sure that the FDI (foreign direct investment) and capital inflows are sufficient and sustainable to finance it” Singh said.