‘Emerging marts have coped well with uncertainty’
SINGAPORE: Emerging market economies overall have absorbed current challenges and are facing them quite well, said International Trade and Industry Minister Datuk Seri Mustapa Mohamed.
“We must acknowledge that some of the emerging markets have improved upon their fundamentals and they are better prepared to face volatility now, than ever before.
“Capital flight from emerging markets has not triggered a crisis similar to that experienced in the past,” he said in a keynote address at the PwC-Insead Second Emerging Market Conference here yesterday.
Mustapa said there are many reasons why some countries are in a much better position to cope with uncertainty. Some are more integrated and connected in global capital markets, with higher foreign assets, including foreign exchange reserves.
He also said policy frameworks in a number of emerging market economies had generally improved over time as it included better strategies in dealing with debt and macro prudential policies.
Having said that, “we are faced with a new reality, ‘the new mediocre’, a phrase coined by Christine Lagarde, the International Monetary Fund managing director,” said Mustapa.
“This is a period characterised by low growth in output, investment, trade, and earnings. As warned by Madam Lagarde, the challenge to policymakers is to prevent ‘the new mediocre’ from becoming ‘the new reality’.
“Whether we like it or not, volatility will be with us for quite a while and we need to navigate our way through shifting sands,” he added. – Bernama