ASEAN Finance and Central Bank Deputies headed by Philippines Deputy Director Bangko Central Diwa C. Guinigondo (5th from right, front row) during the 3rd ASEAN Finance Ministers’ and Central Bank Governors’ Joint Meeting and Related Meetings at the Shangri-la Mactan Resort and Spa Hotel, Philippines, 4 April 2017. Front row, below (L-R): Haji Nazmi bin Haji Mohamad, Brunei, Permanent Secretary, Mahani Moshin, Brunei, Executive Director, Autoriti Monetari brunei Darussalam, Ros Seilava, Cambodia, Undersecretary of State, Ministry of Economics and Finance, Neav Chanthana, Cambodia, National Bank Deputy Governor, Philippines, Deputy Finance Minister, Teresa Habitan, Philippines, Assistant Secretary, Amado Tetangco Jr., Philippines, Central Bank Deputy Governor, Diwa C. Guinigundo, Philippines, Deputy Director, Bangko Sentral ng Pilipinas, Rionald Silaban, Indonesia, Assistant of Minister of Finance for Macroeconomic and International Finance, Perry Warjiyo, Indonesia, Deputy Governor Bank of Indonesia, Sila Viengkeo, Laos, Vice Minister of Finance, Sonexay Sithphaxay, Laos, Deputy Governor, Bank of Laos. Second Row (L-R): Datuk Givinanadam Kalinan, Malaysia, Undersecretary of the International Division, Ministry of Finance, Sukhdave Singh, Malaysia, Deputy Governor, Maung Maung Win, Myanmar, Deputy Minister, Ministry of Planning and Finance, U Soe Min, Myanmar, Deputy Governor, Tan Ching Yee, Singapore, Permanent Secretary for Finance, Jacqueline Loh, Singapore, Deputy Managing Director, Monetary Authority of Singapore, Boonchai Charassangsomboon, Thailand, Ministry of Finance, Chantavarn Sucharitakul, Thailand, Assistant Governor, Pham Tuan Anh, Vietnam, Deputy Director General, Ho Quan Trung, Director for Market Integration, ASEAN Secretariat and Phuong Hoang Hann, Vietnam, Deputy Director General, State Bank of Vietnam. (CDN PHOTO/LITO TECSON)
Amid uncertainties in the global economy such as US President Donald Trump’s protectionist policies and “Brexit,” majority of the Association of Southeast Asian Nations (Asean) central bank governors and their deputies were optimistic Asia will continue to grow.
Tarisa Watanagase, former governor of the Bank of Thailand, said she was positive that the economic growth of Asia, particularly the 10-member Asean bloc, will remain robust despite slow growth among advance economies such as the US and the countries in Europe.
“Advance economies are on the mediocre path because, at the moment, many of them are dealing with the aftermath of the (2007-2008 global financial) crisis, unemployment, weak financial institutions. But the situation in Asean is different because we are following the long-term path,” she said during the Bangko Sentral ng Pilipinas-Official Monetary and Financial Institutions Forum (OMFIF) debate on Monday.
The debate, held at Shangri-La’s Mactan Resort and Spa, opened the 3rd Asean Finance Ministers’ and Central Bank Governors’ Joint Meeting and Related Meetings in Cebu until April 7.
In a crowd survey during the debate, 83 percent of the audience said “no” to the question “Is Asia bound to follow the advance economies’ ‘new mediocre’?” — a term used to describe a phase of relatively slow growth over a long period.
Eight percent voted “yes” while the others were uncertain.
Before the start of the debate, 25 percent said “yes”, 58 percent said “no”, while 17 percent were uncertain.
Asean, with a population of 620 million and an economy of over US$2.4 trillion, is considered “well-embedded regionally and globally.”
Its organization and middle class are also fast expanding while there is still a lot of room for investments, Watanagase said.
She said Asia had already dealt with a financial crisis in 1997 and had put in place measures and reforms to weather the impact of economic uncertainties. But the region might fall into mediocrity if certain issues are not addressed, such as those that pertain to innovative business practices, infrastructure, poverty and climate change.
“We need to have a lot of changes, research and development, innovation, technology and new kinds of skilled labor,” she said.
There would also be a need to invest more in infrastructure as the Asian Development Bank projected that the region would need US$1.7 trillion every year to sustain its growth, reduce poverty, and respond to climate issues.
At the moment, investments in the region only amount to about US$880 billion.
Watanagase also called for reforms in the educational system to help bridge the digital divide within the regional and international markets.
She said these countries need patience as well as investment and policy continuity.
Why new mediocre?
“New mediocre,” according to BSP Governor Amando Tetangco Jr., was a term coined by International Monetary Fund (IMF) Managing Director Christine Lagarde to describe the current economic backdrop in economies such as the US and countries in Europe.
Tetangco, quoting the IMF, said the global economy was already at an inflection point and could, at some point, muddle along with sub-par growth, or it could aim for a better path where bold policies would accelerate growth, increase employment, and achieve new momentum.
He said IMF’s 2015 global growth forecast projected bleak prospects, six years since the global financial crisis, and that recovery was still proceeding, albeit slower than past recoveries.
At the height of the global financial crisis, emerging Asia had been doing the “heavy lifting,” with an average growth of 7.5 percent from 2009 to 2014.
“While the IMF sees near-term outlook for Asia is strong and robust, updates are telling us that we’re no longer seeing double-digit growth for Asia,” he said in his opening remarks.
Such is the case of China, one of the world’s economic powerhouses, growing by only 6 to 6.5 percent in recent years compared to 11 to 12 percent a decade ago.
Citing IMF data, Tetangco said global growth rate is at 3.4 percent in 2017 and 3.6 percent in 2018. This was only a few point higher than the 2010-2016 after-crisis rate of 3.8 percent but lower than the pre-crisis growth rate of 4.5 percent.
Danny Quah, professor at the Lee Kuan Yew School of Public Policy of the National University of Singapore, urged fellow economists to look at the strength of Asian countries from within.
Trash notions
He said the idea that Asia grows only because the West buys its products needs to be put in “the trash heap of history” as it is no longer relevant today.
Asia grew by US$5 trillion dollars between 2008 and 2012 when the US economy was flat on its back, growing only by one trillion dollars during the same period.
“We will continue to tell that story if our policymakers continue to be wise,” Quah said.