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Shock resisting policies needed: Dr Shamshad
Amanullah Khan
Karachi—Dr Shamshad Akhtar, Governor State Bank of Pakistan says
Asian economies need policies which are capable to contain the
impact of external shocks. Asia’s inherent strength and resilience
allowed the region to withstand turmoil in the international
financial markets but appropriate policy responses are critical to
contain the impact of such external shocks.
The Governor was delivering a lecture on ‘Asia: Impact of Recent
Global Developments and Central Bankers’ Response’ in Madrid, Spain
where she was invited by Emerging Markets Newspaper, a part of
Euromoney Institutional Investor Plc., to deliver a keynote address.
In line with its tradition, Emerging Markets Newspaper invites the
central bankers of the region, who have won an award for the
region’s best central banker, to deliver the keynote lecture in an
event organized on the side lines of the Asian Development Bank’s
Annual General Meeting held in Madrid. Dr Akhtar was conferred with
the ‘Best Central Bank Governor for Asia 2007’ award by the Emerging
Markets Newspaper.
Dr Akhtar said that Asia’s inherent strength and resilience remains
intact supported by all-time high reserves being fed by surpluses in
external current account boosted regularly by robust export growth
which in case of net oil exporting countries has received additional
impetus from oil export revenues. “This has allowed the region to
withstand these shocks but appropriate policy responses are critical
to contain the impact of these shocks,” she asserted.
SBP Governor said there is now a broad consensus that slowdown of US
and Europe is likely to have a more distinct impact on Asia. “Impact
has been slow to filter down to Asia in 2007, but is predicted to
impact 2008 economic growth,” she said and added that Asian slowdown
is driven largely by set-backs to IT exports, electronic and certain
categories of exports whose impact is now being felt by these
industries. With nontraditional export and diversification of trade
to newer markets, Asian exports did grow in a number of countries by
double digit, she said.
Dr Akhtar said that the size and scale of interaction between Asia
and America brings immeasurable benefits when the going is good, but
it will also bring a measure of misery when the economy is in
trouble. “Asian central banks and governments need to better
integrate with each other to mitigate and hedge such risks in the
future, take advantage of the higher returns, and take part in the
developments in their own region,” she opined. SBP Governor said
that losses on account of subprime mortgage markets were limited on
the balance sheets of banks and financial institutions that have
been written off.
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