IMF chief backs Asean economic integration

Christine Lagarde, managing director of the International Monetary Fund (IMF), is supportive of the plan of Southeast Asian countries to integrate their economies starting 2015 as she expresses the belief that this will help the Philippines and its neighbors improve standards of living and trim poverty in the region.

Lagarde, who concluded a two-day visit to Manila last week, said she believed the plan to integrate the economies of the 10 members of the Association of Southeast Asian Nations (Asean) was a move in the right direction even as European countries that integrated their economies under the European Union to form the eurozone were now facing a crisis.

Economists said the planned economic integration of Asean would observe a framework that was not totally the same as that of the European Union. They said Asean integration would basically ease the barriers to trade of goods, labor mobility and investments and would not involve the adoption of a single currency similar to the euro.

The adoption of a single currency is considered one of the flaws of the integration of European economies. The relaxation of rules covering cross-border trade and investments is believed to be a wise move for the development of the concerned economies.

“We [IMF] believe that trade integration is a major factor that has helped improve standards of living, lift people out of poverty and increase the contributions of a region to global economic growth,” Lagarde said in a press conference on Friday.

“Whatever will facilitate trade will be beneficial and so integration of Asean economies is certainly welcome,” Lagarde said.

The first woman IMF chief disclosed her support for Asean integration as she highlighted the need for the Philippines to address its problems of poverty and inequality.

She said the Philippines was laudable for being able to keep a respectable economic growth despite the recession in the eurozone, but stressed the need for the country to sustain efforts at reducing poverty and making the benefits of economic growth felt by the masses.

Lagarde cited estimates that 42 percent of Filipinos were living on less than $2 a day.

She said boosting trade within Southeast Asia would help generate jobs, augment incomes and thus reduce poverty incidence in member-countries like the Philippines. For this reason, she said the Philippines and its neighbors should implement integration in a manner that maximized its benefits.

“[Asean integration] has to deliver tangible results that will make a difference,” said Lagarde, who was recently ranked by Forbes magazine as the eighth-most powerful woman in the world.