APEC needs buffers vs financial shocks – Tan

MANILA, Philippines - Asia-Pacific Economic Cooperation (APEC) member-countries must establish buffers to shield them from financial shocks, National Treasurer Roberto Tan said yesterday.

In a speech before the APEC Finance and Central Bank Deputies’ meeting in Tagaytay yesterday, Tan said while global regional integration is propelling Asia’s growth,  a sudden or sharper than anticipated tightening of global financial conditions remains a downside risk.

Tan said policy makers need to seek out ways to sustain the region’s growth momentum while strengthening its resilience to risks arising from the growing channels for spillovers.

“Financial interconnectivity of APEC member economies and their close linkages in the global financial markets, makes the region exposed to the risk of a global market liquidity dry-up and other market volatilities. As such, APEC economies must also build buffers to protect it from these financial market disturbances,” Tan said.

Tan said the uneven growth across economies necessitates greater linkages in trade and investments in order to carry over the growth momentum throughout the region.

He argued that Asian economies are not immune from financial crises, noting that the region’s geographic location makes it highly vulnerable to the damaging impact of natural disasters.

“It has been estimated that 70 percent of the natural disasters that occurred between 2003 and 2013, have hit the Asia-Pacific region and the region bears about $6.8 billion in annual losses from natural disasters.

These underscore the great necessity for APEC economies to forge strategies against the negative economic implications of natural disasters,” Tan said.

Deputies from finance ministries and central banks of APEC member economies are drawing up a roadmap designed to make the region more inclusive and resilient over the long-term.

Delegates agreed that robust growth of economies becomes meaningful only if the benefits are shared by the majority.

For the Philippines, regulations that improve accessibility of credit to micro, small and medium enterprises, as well as increase in allocations for social services are seen to further spur the growth of the economy.

Dubbed the Cebu Action Plan, the roadmap is made up of four pillars: financial integration, fiscal transparency and policy reform, financial resiliency, and infrastructure development and financing.

“The Action Plan is designed to power our shared future with the right foundations: the growing populations of our member economies stand to benefit from a more open, transparent, and resilient region with the infrastructure it needs to sustain inclusive growth trajectories,” Finance Undersecretary Gil Beltran said.