Asian Economies Need to Unite to Face Turmoil

PETALING JAYA: Local economists agree that Asian nations should take urgent and coordinated actions to protect their economic growth in the face of recessionary conditions in the US and Europe.

Aseambankers Malaysia Bhd chief economist Suhaimi Ilias said they must work together to mitigate the slowdown in their economies.

“Asian countries should discuss how to boost their domestic economic activities in terms of consumption and investment. This will sow the seeds for closer integration so that Asian economies are not so dependent on Europe and the US for export growth,” he said in response to a call by the Asian Economic Panel (AEP) for a more coordinated macro-economic expansion among China, Japan, South Korea and other Asian economies.

It said such counter-cyclical policies should include monetary, fiscal and exchange rate actions.

AmInvestment Bank senior economist Manokaran Mottain concurred that Asian countries must do more as a unit to avert a major recession.

“More can be done together, for example, coordinated fiscal stimulus packages and interest rate cuts. China can help in the recovery process by giving financial aid to other Asian countries which are short of liquidity,” he said.

Founded in April 2001, AEP brings together prominent economists from around the world who gather twice yearly to discuss economic issues that are of importance to Asian economies.

Members include professor of economics and director of the Earth Institute at Columbia University Dr Jeffrey Sachs and former Bank Negara deputy governor and a member of the National Economic Action Council working committee Tan Sri Dr Lin See-Yan.

“By undertaking such policies in a coordinated manner, the Asian economies will achieve much larger and more durable results than they would achieve through unilateral actions,” AEP said in a statement.

The AEP expected the US to experience a dramatic downturn, with severe spillovers to other parts of the world.

The spillovers could include falling exports from Asia to the US, a weaker dollar and a withdrawal of credit lines from US banks and US investors in Asia, it noted.

“Macro-economic expansion in Asia will not only help sustain Asia’s own economic growth and employment levels, but will also help put a floor on the coming global slowdown.

“Higher growth in Asia will also mean more sales of US goods in Asian markets, thereby helping to moderate US and European recession as well,” it said.

By Elaine Ang- The Star