SINGAPORE — Asian economies, which are forecast to emerge faster from the global recession than other regions, need to study their stimulus exit strategies “carefully,” Singapore Trade Minister Lim Hng Kiang said yesterday.
The 21-members of the Asia- Pacific Economic Co-operation, whose leaders are gathering in Singapore this week, are at various stages of recovery and will have differing timeframes to remove stimulus measures, he said.
“Asia cannot be completely decoupled from the world and therefore we have to (emerge) carefully to make sure we don’t cause more disruptions,” Lim said. “It’s important for us to sit together and brief each other about our conditions.”
Some economies such as the US and Japan may need to maintain a “benevolent environment”, while others may find it hard to continue “too-loose” monetary conditions, Lim said.
Song Seng-Wun, an economist at CIMB-GK Securities in Singapore, said: “In case global and local economies do not see broad-based entrenched growth, then governments have to keep their feet on the pedals to sustain the recovery.”
Policy makers are moving to unwind some of the emergency steps they took to counter the recession after cutting interest rates .
The Group of 20 nations last week outlined a timetable to rebalance the global economy, mapping exit strategies from the stimulus.
The Reserve Bank of Australia has raised interest rates twice this quarter, while central banks including India’s and South Korea’s have signalled a readiness to raise borrowing costs .
World Bank president Robert Zoellick said the world needed to be on the “offence” in pushing for more open trade and not just stand still or keep things from getting worse.
The US should take the lead on security and economic issues, he said in Singapore yesterday.
Growth in industrialised economies and Asia was “still fragile” even as policy makers were “absolutely correct” in their concerns that stimulus measures may stoke inflation, Asian Development Bank MD Rajat Nag said in New Delhi on Monday.
“It is time to start thinking about it, and it needs to be done in a coordinated rather than an abrupt withdrawal.”