“The evolving global economic environment, cross-border production networks, and the advances in information technology helped leaders recognize the need to work together to build better resilience to potential shocks—both external and internal,” Mr. Kuroda said.
A decade after the crisis, Asia has once again emerged as the fastest growing region in the world. Policymakers in the crisis-hit Asian economies turned the crisis into an opportunity to usher in bold economic reforms and revived the region’s economic dynamism. Many had predicted that the region would take a few generations to recover.
“The crisis provided many lessons that led to crucial economic and financial reforms in the region. The policies adopted have made financial institutions stronger and more resilient to risks. Several sources of vulnerabilities, however, remain and governments in the region need to closely monitor the trend of macro financial variables,” said Thailand’s Finance Minister Chalongphob Sussangkarn.
While trend growth rates in the five crisis-hit countries still remain below their pre-crisis levels, their per capita incomes now surpass their pre-crisis levels, social indicators are improving, and the region is enjoying robust growth.
Developing Asia’s growth performance in 2006 was eye-catching as the region expanded at a blistering pace of 8.3 percent, the fastest growth since 1995. The emergence of the People’s Republic of China and India as economic powerhouses has added a new dimension to regional and global growth.
“Since the turn of this century, our economies have re-emerged to be amongst the fastest growing in the global economy, amidst new challenges and fundamental economic and financial developments. Our steadfast reform and restructuring efforts have rewarded us with strengthened macroeconomic fundamentals and sound and stable financial systems,” said Zeti Akhtar Aziz, Governor, Bank Negara Malaysia.
Asian economies are now forging closer regional economic cooperation, through market-led and government driven initiatives. Closer regional economic cooperation is providing a new platform and laying the foundation for robust economic growth in the region.
“I think it is most appropriate that ASEAN+3 countries are striving toward financial cooperation at the regional level. Prevention is more important than cure,” said Duck-Koo Chung, former Minister for Commerce, Industry, and Energy, Republic of Korea. “We need a new regional financial architecture by speeding up the institutionalization of the Post-CMI measures. A sense of complacency may bring about another crisis.”
Today, Asia faces a different set of challenges. Massive capital inflows as opposed to outflows in 1997, its impact on regional currencies, global imbalances and rising foreign exchange reserves are some of the key challenges facing the region’s policymakers.
Development of stronger capital markets, meeting the region’s massive demand for infrastructure and the issue of rising income and social inequalities which pose risks to the growing prosperity of the region are issues that need immediate attention.
“The development of local currency bond markets in the region is encouraging and provides an avenue to raise long-term finance for meeting the region’s huge infrastructure needs. Investing in infrastructure is vital to sustaining economic growth and reduction of poverty,” said Dorodjatun Kuntjoro Jakti, former Coordinating Minister for Economic Affairs, Indonesia.
The trend of increased market-led integration is spurring greater cooperation among governments in Asia and the Pacific. Asian economies are now moving towards the creation of a new regional economic architecture.
“The process of regionalization needs to be effectively managed so that the benefits flowing from it are shared by all. The process of economic integration will not only strengthen Asia but also increase its contribution to global economy,” said Roberto de Ocampo, Former Secretary of Finance, Philippines.
The panelists concurred that Asia has come a long way ten years after the crisis and now is the time to build on the achievements in regional economic cooperation and integration.
