Growth to hold up – Asean finance chiefs

MANILA, Philippines - The Association of Southeast Asian Nations (ASEAN) expects growth to hold up this year even as challenges of a generally weak global economy and capital flows persist, the region’s finance ministers said.

“We are confident our economies will grow this year at between 5.3 percent and six percent,” the ASEAN finance ministers said in a joint ministerial statement issued after their 17th annual meeting held last week in Brunei Darussalam.

The region— composed of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam— grew 5.6 percent last year, backed by “strong macroeconomic fundamentals, robust domestic demand and sound balance sheets of banks and the corporate sector.”

The forecast compares with the Philippines’ own growth target for the year of six to seven percent. The local economy grew an above-target 6.6 percent in 2012.

Despite the expected solid growth, the ASEAN ministers said threats from a fragile global economy and resulting “volatile” capital inflows remain, which would warrant vigilance and cooperation among member-states.

They also committed to adopt country-specific measures to address these challenges, noting that financial stability continues to be their utmost concern. “Structural reforms” to encourage private sector investment were also vowed.

“We are committed to implement appropriate monetary, fiscal, and other macroprudential policies to sustain economic growth and maintain financial market stability,” the statement read.

Sustained growth prospects were backed by a commitment to deploy the ASEAN Infrastructure Fund this year, which will finance large-scale projects to bridge the infrastructure gap in the region.

The Malaysian-based fund amounting to $485.2 million was launched last year together with the Asian Development Bank (ADB). It targets to finance approximately six infrastructure projects every year.

Additional funds infused to the Chiang Mai initiative— a $240-billion pool of money countries may tap should they need in times of external shocks— was also welcomed.