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Leaders remain optimistic about ASEAN's outlook

Released at: 19:48, 12/09/2018

Leaders remain optimistic about ASEAN's outlook

Photo: WEF

Government and business leaders at WEF ASEAN see positives in region's economic outlook.

by Minh Do

Government and business leaders from Vietnam and other countries attending the World Economic Forum on ASEAN (WEF ASEAN) on September 12 said they remain optimistic about the region’s economic outlook despite threats of an escalation in the US-China trade war, rising interest rates, and fear of emerging countries’ currency contagion.
 
Meetings within WEF on ASEAN were co-chaired by Mr. Nguyen Manh Hung, Acting Minister of Information and Communications, Ms. Anne-Birgitte Albrectsen, CEO of Plan International, UK, Ms. Sri Mulyani Indrawati, Minister of Finance of Indonesia, Ms. Kang Kyung-Wha, Minister of Foreign Affairs of South Korea, Mr. Nazir Razak, Chairman of CIMB Group Holdings, Malaysia, and Mr. Kevin Sneader, Global Managing Partner at McKinsey & Company, Hong Kong SAR, China.

Mr. Razak said he is more concerned about the global economy at a time when US leadership has turned away from its traditional globalist stance and is reacting negatively to the rise of China. In contrast, ASEAN has transformed itself remarkably from “a zone of tensions and conflicts to one of peace and stability” and continues to enjoy tremendous economic growth.
 
Ms. Indrawati and Ms. Judy Hsu, Regional Chief Executive Officer, ASEAN and South Asia, at Standard Chartered Bank, UK, pointed to lessons learned from earlier regional crises that have prepared businesses and governments to manage the current bout of emerging-market volatilities triggered by problems in Turkey and Argentina. “Clients become well versed in managing these risks and have access to hedging tools, and clients with dollar loans have locked in their interest rates,” Ms. Hsu observed.
 
Sound and prudent government policies, including investments in infrastructure and education, are reducing current account deficits and have supported the region’s economic growth. In addition, ASEAN’s youthful demographics - most of its more than 600 million population are young - and rapid access to technology are also fueling domestic consumption and intraregional investments.
 
On the impact of a US-China trade war on ASEAN, Mr. Sneader said that while there will be winners and losers, the outcome is unlikely to be dire. “This generalization is an example of ‘don’t let the facts stand in the way of a good headline’,” he said “The headline is ‘Trade War’ but the reality is there are lots of markets out there, and one of the opportunities is within ASEAN. Intra-ASEAN trade is relatively modest and these markets can replace those that are hurt.”
 
Rising interest rates should also be seen as an opportunity for policymakers and businesses to make the necessary adjustments and to watch reckless spending. “This is a good market discipline in signaling to policymakers as well as players that you are not going to enjoy cheap money and you have to be very prudent,” said Ms. Indrawati.
 
Mr. Veerathai Santiprabhob, Governor of the Bank of Thailand, added that the US could have better coordinated its monetary and fiscal policies, as its tax cuts have unleashed a new source of money supply, which has delayed the US Fed’s attempts to normalize interest rates.
 

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