West can learn from Asia, IMF chief says

Posted at 11/16/12 10:52 PM

Lagarde's advice: Grow that middle class

'IMF needs PH more than PH needs IMF'

Only Philippines gets increased growth forecast in 2012

MANILA, Philippines - International Monetary Fund (IMF) managing director Christine Lagarde on Friday said the West, which has been crippled by an economic crisis, can learn lessons from Asia.

She says in 2 decades, Asia's economic growth will overtake the United States and Europe combined.

"[It] constitutes a  shift in economic history. It is a trend in the last decade. It is a trend of appropriate rebalancing in the world economy," said Lagarde, who is in Manila for an official visit.

The IMF chief, however, said Asia needs more economic integration.

Asian countries should invest more in their own region, she added.

"The integration is 3-fold trade. Financial integration is lagging behind," Lagarde said.

"At the root of an investment decision is trust. Confidence will need to take root within region and I'm sure it will," she said.

Lagarde said there are efforts to make growth more inclusive in Asia, but more work needs to be done.

"Grow that middle class," she said, adding that the government should focus on education, health, and pension schemes to ensure financial safety nets.

"You have the cash transfer system which is well managed," she added.

She also welcomed the Philippines' shift from being a debtor to a creditor.

"The IMF needs the Philippines, rather than the other way around," she said.

During her 2-day visit, Lagarde chose to speak before a group of students from different schools at the Asian Institute of Management, saying she considers it a privilege to speak before those who represent the future.

She is considered as the 8th most powerful woman in the world and the first woman to head the IMF.

She advised other women "to be consistent."

"We tend to undermine our abilities, skills, and ambition," she said.

"Reach out for other women to support you. Have confidence. Follow your own path. Follow your dreams. Realize your own dream, don't necessarily try to copy the boys," she said.

In a world affected by what she calls superfast connectivity, she said she nurtures fellow women by being on the phone a lot and conveys support through text messaging.

Praise for the Philippines

Lagarde also expressed optimism on the Philippine economy for posting a positive economic growth despite the recession in other parts of the world.

She credited the country's fiscal policy, as well as the central bank's monetary policies.

"I congratulate the Filipino authorities for their excellent economic stewardship during difficult times. In the last decade, the Philippines has managed to have an average growth of about 5 percent," she said.

"You will be interested to know that this year, 2012, at a very difficult time because of the financial crisis in other parts of the world, the Philippines is probably the only country of which we have increased the growth forecast as opposed to other places in the world where we actually decreased our forecast," the IMF chief said.

Lagarde noted the Philippines becoming a net creditor, having recently extended a $1-billion loan to the IMF to support countries suffering from an economic crisis.

"The Philippines is a net creditor to the IMF and has actually participated in the bilateral loans that have been put in place this year in order to contribute to the increased resources of the IMF to deal with the consequences of the financial crisis, including for the crisis bystanders. So the IMF is very, very pleased for the historical partnership that we've had, but particularly pleased that it is now taking in the form of a creditor's relationship," she said.

Finance Secretary Cesar Purisima said the IMF will play a role in Mindanao following the forging of the framework agreement between the government and the Moro Islamic Liberation Front.

"We look forward to working with the IMF, for example in building institutions in Mindanao, as we implement the peace agreement that will hopefully be signed within the next few months after the signing of the framework agreement," Purisima said Friday.

"We will be doing everything we can to support with technical assistance the effort of the Philippine authorities to expand growth throughout the country in all its diversity and to the far end of the country where peace is now hopefully returning," Lagarde said. - with reports from Willard Cheng, ABS-CBN News; ANC