Asia resilient to sub-par growth – BSP

MANILA, Philippines - Asia, including the Philippines, is resilient enough and would likely defy the sub-par growth experienced in advanced economies, according to the Bangko Sentral ng Pilipinas (BSP).

In his opening remarks during the BSP – Official Monetary and Financial Institutions Forum (OMFIF) BSP Governor Amando Tetangco Jr. said Asia is set to become a pillar of growth for the global economy in the coming years.

“Asia, like the rest of the world, suffered significant impact from the global financial crisis. But it proved to be resilient,” Tetangco said.

Relative to the rest of the world, Tetangco said the output decline in Asia was smaller by almost three percentage points and the cumulative output loss was lower by 11 percent of annualized gross domestic product (GDP) in the third quarter of 2008.

Asia’s resiliency during the GFC was an offshoot of the key financial, structural and institutional reforms that defined Asian economies after the 1997 Asian financial crisis, according to Tetangco.

“With a mindset that macroeconomic policies, including strong financial and external positions are equally important to sustain economic resiliency, policymakers in Asia adopted a more proactive and rigorous approach to banking supervision,” he said.

The BSP chief added macroprudential policies became staples in the arsenal of Asian central banks in addressing emerging systemic risks in the financial sector.

Furthermore, many Asian central banks accumulated foreign reserves because of more flexible exchange rates to provide buffers against a sudden reversal of capital flows.

He said key initiatives including the Association of Southeast Asian Nations (ASEAN) Surveillance Process, ASEAN+3 Economic Review and Policy Dialogue, Chiang Mai Initiative, and Asian Bond Market Initiative were established to strengthen the region’s capability to prevent and manage future financial crises.