US financial crisis a "window of opportunity" for Asia

abs-cbnNEWS.com | 10/07/2008 10:53 PM

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The former chief of the IMF challenged attendees of a business forum on Monday to learn the lessons of the US financial crisis and to use this as a “window of opportunity” for the region.

Michel Camdessus, former managing director of the IMF and an honorary governor of Banque de France, told audience attending the 7th Management Association of the Philippines in Makati City that Asia is in a position to face the global slowdown and financial turbulences, given the formidable progress of its economies.

“Consider the present time as a window of opportunity not to be missed to implement deep structural reforms, for getting rid of the remaining obstacles to growth, and for better distribution of its gains,” he said.

He said Asia should take this opportunity to address the problem of poverty. He stressed that poverty, which is "severe and [has] long-term [effects]," is one of the biggest challenges for policy makers as they provide a new architecture for the global financial system.

“Knowing the negative consequences of poverty, excessive inequalities of distribution of income, I couldn’t but strongly encourage efforts for stimulating more inclusive growth and for the promotion of equality of opportunities, particularly for women,” he said.

There is no better time than now since, according to Camdessus, “This century is a century of Asia.” He added that he was not referring only to China and India, two of Asia’s biggest economies, but other countries in the continent, including the Philippines.

Asia’s strength lies on the fact that, in general, Asia’s economic growth has mostly been based on its own domestic demand, thanks to its big population base. A growing portion of the aggregate population is also earning more as some economies grew faster than that of other regions.

In fact, with such current economic position, he added highlighted that “your countries are now creditors of the world.”

By buying US’s government-issued bonds, China has been funding about half of US’s deficit which was created as more Americans, taking advantage of available credit from financial institutions, spent more than what they earned.

Nonetheless, he stressed the need for the Asians to recognize the increased interdependence among countries in the world.

He said that while the US just recently adopted a rescue package for its financial sector, “This will undoubtedly impact Asian markets in a way which is still impossible to assess.”

He said emerging market countries, especially those in Asia, need to anticipate the impact of the financial crisis on slowing exports and foreign direct investment.

as of 10/07/2008 10:53 PM