Amid market volatility intra-regional trade buoys Asian economies

MANILA, Philippines - Asian nations have bolstered trade among themselves, offsetting weakness in advanced economies and helping spur growth in the region at a time of market volatility, Bangko Sentral ng Pilpinas (BSP) Governor Amando Tetangco Jr. said recently.

“The region’s growth has remained strong and this was underpinned by domestic demand with further support of intra-regional trade,” Tetangco said.

Tetangco made the statement fresh from his discussions with counterparts at the 18th Executives’ Meeting of East Asia-Pacific Central Banks (EMEAP) in Kuala Lumpur, Malaysia.

EMEAP groups central banks from Indonesia, Malaysia, the Philippines, Singapore and Thailand – the so-called ASEAN-5 – together with those from Japan, South Korea, New Zealand, China, Australia and Hong Kong.

 During the forum, Asian governors discussed the “ongoing uncertainties in the global economic environment,” particularly the market volatility spurred by reports the US will unwind its stimulus measures soon.

They agreed, however, that the region has the “resilience” needed to survive the financial market turbulence, driven mainly by local consumer demand.

“Domestic demand has been bolstered by diversification of trade activity from the traditional markets, meaning from the US and Europe to greater trade within the region and other emerging economies,” Tetangco explained.

 â€œThe shift has been observed to be faster in recent years,” he added.

From 44 percent of total exports in 2000, shipments between EMEAP members now accounted for half of total world trade. Across other emerging economies, the figure rose to 28 percent from just 17 percent.

This, Tetangco said, is proof that export demand remains firm in developing countries even as their counterparts in the West continued to struggle from the debt crisis, denting trade demand.

“You will notice here that the trade of EMEAP has shifted to markets that are experiencing sustained economic growth,” he pointed out.

“But there are of course volatilities that have been experienced and there have been a number of policy responses that have been adopted by EMEAP central banks,” he added.

 Among others, Tetangco said EMEAP central banks have already instituted “regional surveillance” of the group’s financial system and institutions as well as adopt enhanced policy tool kits.

“Bottom line is, okay there are volatilities and these will remain as the advanced economies unwind their easy policy. But the EMEAP economies are in a position to ride through these volatilities,” he said.