Asian economic watchdog sees pockets of vulnerability
East Asia's economies are in no immediate danger of a liquidity crisis but do face risks around some of their corporate debt levels, the head of a regional economic surveillance unit said on Friday.
Yoichi Nemoto, director of the ASEAN+3 Macroeconomic Research Office ( AMRO), said the region's economies have been resilient in the face of the latest bout of investor risk aversion that started last August.
"Members have accumulated certain experiences how to cope with these (bouts of) market volatility," Nemoto told reporters. "So far, countries...have shown certain resilience to this kind of situation," he added.
The ASEAN+3 regional bloc includes Southeast Asian nations, South Korea, China and Japan. AMRO was established in Singapore in April 2011 as a surveillance unit to monitor economies in the region and granted status by ASEAN+3 members as an international organization earlier this month.
Its new legal status allows it to contribute to ASEAN+3 member countries' decisionmaking process on whether to activate a $240 billion regional currency swap arrangement called the Chiang Mai Initiative Multilateralisation (CMIM), through support such as economic analysis.
Nemoto said AMRO doesn't believe the region faces a liquidity crisis in the "very near future". The regional currency swap scheme was initially created in the wake of the 1997-98 Asian financial crisis and later strengthened. AMRO's new status enables closer collaboration with other international organizations such as the International Monetary Fund.
The Chiang Mai Initiative Multilateralisation safety net is made up of two facilities: a crisis resolution mechanism and a crisis prevention function. The bulk of funds can only be employed along with IMF programs, although 30 percent can be activated without them.