Trade tensions drag global growth

Asian Central bankers warn

MANILA, Philippines — Central bank governors in the East Asia and Pacific region including the Philippines are convinced that trade tensions are detrimental to the global economy.

Governors of the 11 member central banks and monetary authorities including Bangko Sentral ng Pilipinas Governor Benjamin Diokno convened in Shenzen, China last Thursday for the 24th Executives’ Meeting of East Asia-Pacific (EMEAP) Central Bank Governors.During the meeting chaired by People’s Bank of China Governor Yi Gang, views were exchanged on recent global economic and policy developments.

“They also discussed the challenges and policy responses of EMEAP central banks and monetary authorities under trade protectionism. Governors concurred that trade tensions are detrimental to the global economy,” the group said in a joint statement.

For one, the International Monetary Fund (IMF) slashed its global growth forecasts to 3.2  percent instead of 3.3 percent for 2019 and to 3.5 percent instead of 3.6 percent for 2020 as it stressed the urgent need to reduce trade and technology issues.

The Fund cited adverse developments including further US-China tariffs, US auto tariffs or a no-deal Brexit.

These have sapped confidence, weakened investments, dislocated global supply chains, and severely slowed global growth.

Throughout the discussions in China, the governors reaffirmed the importance of EMEAP as an effective platform for policy dialogues and strengthening regional cooperation in areas of mutual interest.

In the Philippines, the country’s gross domestic product growth averaged 5.5 percent in the first half after easing to a four-year low of 5.5 percent in the second quarter from 5.6 percent in the first quarter due to soft global export markets and the delayed passage of the 2019 national budget.

 This was lower than the six percent to seven percent target range set by economic managers through the Development Budget Coordination Committee.

The BSP’s Monetary Board has slashed interest rates by 50 basis points so far this year and lowered the reserve requirement ratio for big and mid-sized banks by 200 basis points and for small banks by 100 basis points to release P210 billion into the financial system and boost the economy.

The officials also reviewed reports of recent EMEAP work, endorsed the report on study on the Implications of Financial Benchmark Reforms and welcomed the progress of EMEAP projects on banking supervision, financial markets, payments and market infrastructure, and information technology.

Aside from the BSP, other members of EMEAP founded in 1991 are the Reserve Bank of Australia, People’s Bank of China, Hong Kong Monetary Authority, Bank Indonesia, Bank of Japan, Bank of Korea, Bank Negara Malaysia, Reserve Bank of New Zealand, Monetary Authority of Singapore, and Bank of Thailand

The Hong Kong Monetary Authority is set to host the 25th EMEAP Governors’ Meeting next year.