Economies worldwide may only start to recover after two to five years, especially with the global economic crisis taking its toll on major industries, Japan’s former top currency official said Thursday.
According to former vice finance minister Eisuke Sakakibara, the downward trend will continue despite the perceived recovery in some countries, which he referred to as only a “short-term rise.”
“There’s rebound at the moment because of a radical sharp decline for the past six months…There may be signs of recovery, but I think that’s just temporary,” he told reporters in a press briefing at the Asian Development Bank (ADB) headquarters in Manila.
Sakakibara, who is currently a professor at Waseda University, said the recovery may start from Asian countries, particularly from China and India. Any sign of recovery, however, was seen by Sakakibara as “L-shaped” instead of “V-shaped,” signifying a stagnated state of the world economy in the years to come.
“Markets are only trying to find something positive,” he said, referring to those who continue to give optimistic growth projections during this time of crisis.
Given the severity of the crisis, Sakakibara advised all agencies to be more realistic in their targets this year. “It’s always better to have a pessimistic view of the economy, particularly if you’re in charge of policies of government…Always lower projections so you won’t be criticized as much.”
International organizations have had nothing but bleak forecasts for the Philippines’ economic output this year, led by a zero growth projection by the International Monetary Fund from its previous 2.25-percent estimate .
London-based Fitch Ratings has also cut its economic growth forecast for the country to only 0.1 percent from 0.5 percent, while the World Bank has projected a dismal growth this year at 1.9 percent . ADB, meanwhile, had a more optimistic outlook for the Philippines with a gross domestic product (GDP) growth of 2.5 percent.
Still, all these are a far cry from the government’s target range of 3.1 to 4.1 percent for 2009.
Asian monetary fund?
Meanwhile, Sakakibara renewed the call for Asia to have its own monetary fund as part of efforts towards economic integration in the region.
“The time has come to take a bold step to regional integration. We need institutions to follow up markets,” he said.
Sakakibara, one of the proponents of the Asian Monetary Fund (AMF), said the idea failed to materialize years ago due to the strong opposition of the United States government as well as the lack of strong coalition between Japan, China, Korea, and the Association of the South East Asian Nations (ASEAN).
“Prior consultation with China was lacking, so at the time of the proposal, China was neutral,” he explained.
Sakakibara said Asian countries could pitch in 5 percent of their revenues–estimated at around $200 billion–to create the AMF. A joint secretariat would then manage the fund, performing surveillance and crisis management duties.
“[The joint secretariat] should be independent from the IMF (International Monetary Fund),” he said.
Still, he said the AMF would be similar to IMF, except that the former’s target of operations is limited to Asia.
Two months ago, former IMF chief Michel Camdessus said Asia should be at the helm of a “new architecture” of global governance, which involves a brand new IMF and a more inclusive global governance group to replace groups such as the G8 and the G20.
“Asia must be in the driving seat, or at least share it with key international centers of the world…This is the hour of Asia,” he said. –Karen Flores, abs-cbnNEWS.com
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