Asian central banks said an expansion in policy instruments and careful coordination are essential to building defenses against increased challenges to growth and financial stability in the region.
Central banks also must remain vigilant and improve their domestic economies amid changing global economic conditions, the governors of South East Asian Central Banks (SEACEN), said in a statement after a three-day meeting in Manila that concluded on Friday.
“The shifting dynamics of global economic conditions have given rise to increased uncertainty for SEACEN economies, particularly in two aspects — growth and financial stability,” they said.
“There is a need to maintain vigilance by clearly identifying and managing risks and various points of vulnerabilities to boost the resilience of the respective economies,” the statement said.
Risks to the growth and stability of SEACEN economies might be transmitted through trade, foreign exchange, interest rates and capital flows, they said.
The governors said that growth in some developing nations has slowed as developed economies recover, while a stable global oil supply, coupled with weak demand, has led to low commodity prices damping growth prospects in commodity-exporting countries.
An inevitable gain in US interest rates is expected to change financial conditions in emerging-market economies, the group said.
The governors said there is a need to reform the international monetary system and emphasized the role of global financial institutions in addressing issues and challenges.
“Building resilience will also entail the expansion and careful coordination of policy instruments to address the multiple objectives of financial stability and promoting macroeconomic stability to help sustain strong growth,” they said.
Asia remains the world’s fastest-growing region, according to the IMF.
Asia is expected to expand 5.4 percent this year and next year as the region’s disposable incomes increase and its labor markets stay strong, the IMF said. By contrast, the global economy is expected to grow 3.1 percent and 3.6 percent this year and the next, it said.
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