ADB sees Asean economies growing 5.2% in ’12 despite crisis

30 March 2012
AFP

PHNOM PENH - Southeast Asian economies are forecast to grow by 5.2 per cent in 2012, the chief of Asian Development Bank (ADB) said on Friday, though he urged nations to be “vigilant” in an uncertain global environment.

“Despite a difficult external environment, we still expect Asean growth this year to remain robust at 5.2 per cent, above last year’s rate of 4.6 per cent,” Haruhiko Kuroda told finance ministers of the 10-

member Association of Southeast Asian Nations (Asean) during a meeting in the Cambodian capital.

Thailand and the Philippines are likely to show “vibrant growth” after a drop in exports last year, he said, while Singapore, and to a certain extent Malaysia, will see “some slowdown” as they are more affected by external financial turmoil.

Looking ahead to 2013, the Manila-based bank expects Asean Gross Domestic Product to expand above 5.5 per cent on the back of improved domestic demand and exports, as worries about the US and euro zone economies look set to ease.

“The region is doing well,” the ADB president said, but Asean nations - which also include Indonesia, Brunei, Cambodia, Laos, Vietnam and Myanmar - should be on guard for “sudden shocks”.

In the short-term, the countries face high oil prices, volatile capital inflows, which could hurt exporters, and the “serious risks” still posed by Europe’s woes, Kuroda said.

“Should financial panic happen, contagion could spread and liquidity tighten,” he added.

“Given today’s uncertain environment, it is extremely important to remain vigilant in monitoring global events.”

Kuroda said Asean nations should consolidate growth momentum by pushing for greater cooperation and financial integration and reducing their reliance on the US and Europe to drive exports.

Meanwhile, China, Japan, South Korea and the Asean bloc have agreed to double the funds available under a regional currency swap pact that can be tapped during financial crises, officials said on Friday.

The deal, known as the Chiang Mai Initiative, will grow from $120 billion to $240 billion, giving countries with relatively small foreign exchange reserves a safety net against future liquidity shortages.

The decision to expand the fund was taken on Thursday by finance deputies from the 10-member Association of Southeast Asian Nations and their counterparts from China, Japan and South Korea, known as the Asean+3 countries, according to a source privy to the discussions.

The meeting was held in the Cambodian capital on the eve of a gathering of Asean finance ministers in which they are expected to endorse the decision.

“This will be the firewall of the Asean+3 region against further crises,” said Cambodian Prime Minister Hun Sen.

He urged the finance ministers “to pay serious attention” to finalising the deal this year, saying it would enhance market confidence in the region’s ability to withstand future financial shocks.