Southeast Asia could grow 5.6 pct this year: ASEAN

Southeast Asian economies will grow up to 5.6 percent this year, according to a report by a regional body on Tuesday.

Southeast Asia could grow 5.6 pct this year: ASEAN

Southeast Asian economies will grow up to 5.6 percent this year but the expansion could be jeopardised if economic stimulus is withdrawn too early, according to a report by a regional body on Tuesday.

Nevertheless, the governments of the 10-member Association of Southeast Asian Nations (ASEAN) need to design an orderly exit strategy to show that they have inflation expectations under control, said the latest draft of the ASEAN Surveillance Report. "Following the pace of growth in Asia, the ASEAN economy will grow by about 4.9 percent to 5.6 percent in 2010 with ASEAN economies recording moderate to strong growth," it said. The report was presented at a meeting of deputy finance ministers and central bank governors and seen by Reuters.

ASEAN comprises an array of economies at different stages of development including Brunei, Cambodia, Laos, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Asia is leading the global recovery, in part thanks to robust stimulus policies launched during the financial crisis.

All eyes are now on how and when these countries take back the stimulus and address what some economists see as a rising risk of inflation. ASEAN finance ministers are expected to discuss this when they meet in the Vietnamese beach resort of Nha Trang on Wednesday and Thursday. The 10 ASEAN leaders meet on Thursday and Friday in Hanoi for their annual summit.

The ASEAN report said "the urgency for exiting from stimulus measures was not high as the inflation risk remains benign, debt levels are sustainable and there is little evidence that private demand is self-sustaining".

The region needed to design an exit strategy "to anchor expectations and to assure the community that expansionary policy settings will not lead to inflation and further financial instability", it said.

"Timing is crucial as moving too early could undermine economic recovery while prolonged action could create costly distortions and volatility."

Reuters

Güncelleme Tarihi: 06 Nisan 2010, 11:42

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