ASEAN is moving further closer to creating a common market, but member nations are concerned that the normalisation of monetary policy rates in the United States would hinder growth in the region, Philippine Finance Secretary Carlos Dominguez said.
Dominguez was in Washington representing the regional bloc in a meeting of International Monetary Fund IMF managing directors with Asean finance ministers and central bank governors.
According to the Philippine Department of Finance, Dominguez told the meeting about the concerns of the Asean finance ministers over the prospect of more developed countries adopting inward-looking policies.
The finance chief said his Asean counterparts were also worried about the possibility of “sharper-than-expected” financial tightening in such an export-oriented region amid the normalisation of US policy rates.
Even then, Dominguez said Asean continued to meet its timetable on economic integration as spelled out in the Asean Economic Blueprint 2025. The Philippines chairs Asean this year.
“The Asean has moved dramatically in its effort to build a region-wide policy framework to enhance trade, economic cooperation and financial flows among the association’s member-countries,” he said.
“We are now moving closer toward achieving the strategic goal of a common regional market.”
Also, Dominguez noted that average growth this year among the Asean countries was expected at 5 per cent, thanks to strong domestic consumption across the region.
Dominguez added that, in some Asean economies, faster growth was inhibited by higher inflation and weaker-than-expected trade flows.
These factors, he said, were “short-term limitations” and could turn for the better once global growth picked up.
“The Asean region is presently one of the fastest and main drivers of global growth,” Dominguez said.
“As a group of export-oriented economies, however, we look with concern at the prospect of more developed countries adopting more inward-looking trade and investment policies,” Dominguez said.
Regarding monetary policy in the US, Dominguez said the period of low interest rates, supplemented by low fuel costs, saw the region’s economies expand rapidly.
“We have [also] achieved progress as well on the Asean+3 Macroeconomic Research Office (Amro),” Dominguez added, referring to an initiative with Japan, China and South Korea. “We have finalised the Amro’s Strategic Direction and Medium-term Implementation Plan, [which] seeks to build up Amro towards delivering high quality and original surveillance to member economies supportive of the CMIM,” Dominguez said.
The CMIM - Chiang Mai Initiative Multilateralisation — is a currency swap agreement among the finance ministries and central banks of the Asean+3 economies, aimed at providing financial support for short-term liquidity problems.
Dominguez said further a memorandum of understanding between the Amro and the Asian Development Bank has already been signed, with the Asean looking forward to the conclusion of a similar agreement with the IMF.