Con­sider macro­pru­den­tial mea­sures to com­ple­ment mone­tary pol­icy, urges Amro

New Straits Times - - Business -


ASIAN pol­i­cy­mak­ers need to pri­ori­tise sta­bil­ity over boost­ing eco­nomic growth in the face of global trade risks and the tight­en­ing of fi­nan­cial con­di­tions, said a re­gional body.

With low in­ter­est rates fu­elling a debt build-up across many coun­tries, au­thor­i­ties should con­sider tar­geted macro­pru­den­tial mea­sures to com­ple­ment mone­tary pol­icy, said the Asean +3 Macroe­co­nomic Re­search Of­fice, known as Amro, in its in­au­gu­ral eco­nomic out­look re­port yes­ter­day.

“The balanc­ing act be­tween eco­nomic growth and fi­nan­cial sta­bil­ity has be­come more del­i­cate,” said Amro.

“It would be pru­dent for pol­icy mak­ers to pri­ori­tise fi­nan­cial sta­bil­ity.”

Twenty years af­ter the Asian fi­nan­cial cri­sis and a decade since the global credit crunch, the re­gion is still bat­tling with a debt prob­lem.

Ex­po­sure to China’s slow­down, fluc­tu­at­ing com­mod­ity prices and cur­rency volatil­ity are just some of the risks.

While coun­tries had size­able buf­fers to cush­ion against shocks, the risk to fi­nan­cial sta­bil­ity couldn’t be ig­nored, said Amro.

Amro acts as a macroe­co­nomic sur­veil­lance unit for the re­gion and its re­port, which was re­leased at the an­nual meet­ing of the Asian Devel­op­ment Bank in Yoko­hama, cov­ers coun­tries in Asean, as well as China, Ja­pan and South Korea.

Amro’s growth out­look for many coun­tries in the re­gion was sim­i­lar to fore­casts re­leased last month by the In­ter­na­tional Mone­tary Fund.

Growth in China would prob­a­bly ease to 6.5 per cent this year and 6.3 per cent next year, while ex­pan­sion in Ja­pan and South Korea this year would also fall short of last year’s lev­els.

In South­east Asia, Amro fore­casts In­done­sia’s econ­omy would grow at a faster pace of 5.1 per cent this year and 5.2 per cent next year.

Growth in most economies in the re­gion are ex­pected to ac­cel­er­ate this year.

The global econ­omy re­mained vul­ner­a­ble to pol­icy un­cer­tainty and a slow­down in the United States and China, the big­gest sources of trade, might have a dis­pro­por­tion­ate im­pact on the re­gion’s growth, said Amro. Bloomberg

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