Asia-Pacific will continue to be the world’s main growth driver as countries like the Philippines shift to trading with its neighbors and other emerging markets amid weak demand from the developed world.
At a meeting of central bank governors in Kuala Lumpur last week, the region’s top monetary officials agreed to coordinate policies that will support the region’s economy.
“If you look around the region, you will see that economies have performed well even during this period of financial market volatility and slow growth in the US and the continuing negative growth in Europe,” Bangko Sentral ng Pilipinas (BSP) Govenor Amando M. Tetangco Jr. said in a briefing.
Tetangco, who attended the Executives’ Meeting of East Asia Pacific Central Banks, or EMEAP, last weekend, said other participants expressed optimism about the region’s prospects.
He said economic growth in countries like the Philippines was supported mainly by domestic demand and trading within Asia-Pacific, helping insulate the region from the effects of the slowdown in the United States.
Central bank heads at the EMEAP meeting were from Indonesia, Malaysia, Singapore, Thailand and the Philippines, Southeast Asia’s five largest economies.
Joining the so-called Asean 5 were central bankers from Japan, South Korea, China, Hong Kong, Australia and New Zealand.
“Growth is continuing, inflation has remained stable, and the banking system is also stable,” Tetangco said.
Over the last 10 years, EMEAP countries have shifted their trade activities to focus more on each other, rather than traditional markets like the US and Europe.
Intra-regional trade now makes up half of the region’s total exports, up from 44 percent in 2000. Trade with other emerging markets like Brazil and India makes up 28 percent, up from 17 percent.
However, EMEAP members also took note of possible risks that could derail the region’s boom. Tetangco said other central bank heads agreed to greater surveillance within the region to help with the early detection of strains in financial markets that could lead to volatility in asset prices and foreign exchange movements.
He said EMEAP members would also continue to develop enhanced “policy toolkits” that would help regulators rein in inflation and address other stress points without having to touch key policy rates.