Emerging marts seen to contribute more to global economy

MANILA, Philippines - Asia, including emerging markets like the Philippines, is expected to contribute more to the global economy in the coming years amid sound fundamentals, a top central banker said.

“Asia is transitioning from being global producers to global consumers...this is a fundamental change that is happening in the global economy,” Bank Negara Malaysia Governor Zeti Akhtar Aziz said in a forum on the sidelines of the 45th Annual Meeting of the Board of Governors of the Asian Development Bank.

The region has benefited from its resilience and the policy flexibility to minimize the effects of the global financial crisis, he said.

For Edward Teather, executive director and senior economist at the Asian bureau of UBS Investment Bank, Asia excluding Japan will account for 33 percent of global output by 2020 compared with 17 percent each for Europe and the US.

This is a big improvement from the 24 percent contribution of the region in 2008, almost close to the 21 percent each for Europe and the US, he said.

Aziz said Asian economies conducted a rebalancing effort from being export dependent to seeking growth from local demand.

Furthermore, Aziz said the demographics works to the advantage of Asia, which accounts for 60 percent of the world’s population.

“Vast, growing middle class will be the key drivers for Asia,” Aziz said.

By 2030, the current 500 million Asian middle class is expected to reach more than three billion that will drive growth and trade patterns globally.

But for Naoyuki Shinohara, deputy managing director of the International Monetary Fund, risks still abound.

For instance, fiscal consolidation will affect the balance sheet of lenders.

“This will result in a strong retrenchment of the funds from the private sector,” Shinohara said.

Aziz said severe contraction in Europe and US will affect Asia through trade channels through the weakness in global demand.

Meanwhile, Asia is not yet ready for a single currency system.

“Asia is one of the most diverse nations in the world...It is not worth our while to pursue that,” Aziz said.

Aziz said Asia is one of the most diverse regions in size, resources, stage of development, degree of openness and orientation.

Instead, Asia will have a greater shared prosperity through financial intermediation, which will provide funds for better productive activities in the region, Aziz said.

Talks of a single currency in ASEAN emerged following the 1997 Asian financial crisis but there were no mentions of new developments in the scheme in ASEAN Ministers’ communiqué for the past few years.

The only single currency bloc in the world, the 17-member euro zone, has been struggling with the debt crisis in countries like Greece, Portugal, Ireland and Spain.