IMF: PHL TO BE ASEAN LAGGARD / BERNANKE DEFENDS RESPONSE TO ECON CRISIS
MANILA, APRIL 18, 2012 (PHILSTAR) - By Lawrence Agcaoili - Multilateral lender International Monetary Fund (IMF) yesterday said the Philippines would be the laggard in economic growth among the Association of Southeast Asian Nations-5 (ASEAN-5) this year and in 2013.
In its latest World Economic Outlook (WEO), the IMF said the country’s gross domestic product (GDP) would grow 4.2 percent this year and 4.7 percent in 2013 after slackening to 3.7 percent last year from 7.6 percent in 2010 due to weak global trade and cautious spending by the Aquino government.
The projected GDP growth this year for the Philippines is slower than Indonesia’s 6.1 percent, Vietnam’s 5.6 percent, Thailand’s 5.5 percent and Malaysia’s 4.4 percent.
For next year, the country’s GDP forecast is also lower than Thailand’s 7.5 percent, Indonesia’s 6.6 percent, and Vietnam’s 6.3 percent but is at par with Malaysia’s 4.7 percent.
The IMF sees the GDP in ASEAN-5 expanding by 5.4 percent this year and 6.2 percent next year from 4.5 percent last year.
The multilateral lender sees the GDP in Asia growing six percent this year and 6.5 percent next year from 5.9 percent last year as activity across the region slowed during the last quarter of 2011, reflecting both external and domestic developments.
In emerging Asia, adverse market developments were correlated with countries’ reliance on euro area banks.
Euro area banks have already begun reducing their cross-border lending. Asian banks are generally in good financial health and many large Asian banks have sufficient capacity to step up lending further.
Last month, IMF mission chief for the Philippines Vivek Arora said the country would likely regain its potential growth rate of about five percent starting next year after slackening last year due to weak global trade.
Arora pointed out that the fiscal stimulus as well as the monetary policy stance of the Bangko Sentral ng Pilipinas (BSP) and strong remittances from overseas Filipino workers (OFWs) would boost domestic demand.
Based on its latest outlook, the IMF sees inflation easing to 3.4 percent this year before rising to 4.1 percent next year from 4.8 percent last year.
This is slower than Vietnam’s 12.6 percent, Indonesia’s 6.2 percent, and Thailand’s 3.9 percent but faster than Malaysia’s 2.7 percent.
For next year, average inflation in the Philippines would be slower than Vietnam’s 6.8 percent and Indonesia’s six percent, but faster than Malaysia’s 2.5 percent and Thailand’s 3.3 percent.
The IMF pointed out that the world growth economic prospect is expected to improve in the second half of the year as a result of the combined policy measures taken across developed and emerging market economies.
BERNANKE DEFENDS FED RESPONSE TO FINANCIAL CRISIS / NEW WB PRESIDENT
[PHOTO - Federal Reserve Board Chairman Ben Bernanke testifies before the US Senate Budget Committee on Capitol Hill in Washington, D.C., in this Feb. 7 file photo. / AFP/Getty Images]
WASHINGTON, APRIL 16, 2012 (MALAYA BUSINESS INSIGHTS) Chairman Ben Bernanke said Friday that the Federal Reserve was left with few good options when it stepped in to shore up the largest US financial institutions during the 2008 crisis.
Bernanke defended the central bank’s actions to support insurance giant American International Group and help with the sale of investment bank Bear Stearns, during a speech to a New York conference examining the crisis.
While there were risks associated with that support, Bernanke said that the billions of dollars in loans the Fed provided were backed by adequate collateral and taxpayers did not lose money. And he noted that the Fed and other US regulators are better positioned to deal with a crisis because Congress passed an overhaul of financial regulations in 2010.
“The Federal Reserve’s responses to the failure or near failure of a number of systemically critical firms reflected the best of bad options, given the absence of a legal framework for winding down such firms in an orderly way in the midst of a crisis — a framework we now have,” Bernanke said.
Some have criticized the Fed for helping rescuing those institutions rather than letting them fail. They said the Fed sent a message: banks could expect the government to bail them out after taking extraordinary risks that threatened the larger financial system.
In his speech, Bernanke disputed this view. And he said the regulatory overhaul gave the Fed new powers to wind down those institutions without threatening the larger financial system.
Bernanke’s speech didn’t address the current state of the economy or the Fed’s recent policy action to boost growth. But he did emphasize that the Fed’s regulatory duties are just as important as that mission.
“Going forward, for the Federal Reserve as well as other central banks, the promotion of financial stability must be on equal footing with the management of monetary policy as the most critical policy priorities,” Bernanke said.
After the speech, Bernanke was asked whether the Fed’s low benchmark interest rate helped fuel the housing bubble. The question was directed at policies under former Chairman Alan Greenspan, who preceded Bernanke at the Fed.
Bernanke disagreed but said regulators must pay close attention to the financial system when interest rates are low. The comment was Bernanke’s only reference to interest rate policies. – AP
NEW WORLD BANK PRESIDENT
Doctor in charge at the World Bank will have to revive the patient
In a plot from The West Wing, Jim Yong Kim will take lessons from fighting HIV-Aids and TB to running the financial institution
[PHOTO -Jim Yong Kim, American nominee for the World Bank president, with US secretary of state Hillary Clinton and President Barack Obama in the Rose Garden at the White House in March 2012. Photograph: Brendan Smialowski/AFP/Getty Images]
It was Aaron Sorkin's The West Wing come to life: the White House solving a dilemma with a dramatic move, plucking out an obscure but highly qualified candidate for a crucial post.
Or so it seemed when Barack Obama put forward Jim Yong Kim as the United States's nominee for president of the World Bank, the pre-eminent multilateral development agency. Kim is all but certain to be approved by the bank's executive board on Monday.
In any other year, the choice of a 52-year-old doctor who established innovative programmes to fight HIV-Aids and tuberculosis would have been applauded as progressive — especially as the bank's previous 11 presidents have all been white men.
The difference is that this year, for the first time, the US nominee is being challenged by a strong candidate from the developing world, Nigeria's finance minister Ngozi Okonjo-Iweala.
The prospect of backing Okonjo-Iweala – a talented economist who rose to become a World Bank managing director – must have tantalised the White House. But political considerations force Obama to nominate a US citizen. Luckily, Kim also has a backstory that makes him stand out.
Kim was born in Seoul in 1959, in a South Korea ravaged by war. Like many others, Kim's family suffered greatly. His father fled from the north at the age of 17 and never saw his family again. Kim's mother was forced to march 200 miles to escape the advancing North Korean army, and lost her own mother.
"My family's experience has given me an unshakable optimism about what can happen to the poorest people. You can start from humble beginnings and horrible conflicts and go on to lead a life of dignity," Kim has said.
When Kim was five, his family emigrated to the US and settled in Iowa, where his father, Nhak Hee, taught dentistry. His mother, Oaksook, received a scholarship to study philosophy.
Kim thrived in the midwest, where he was quarterback on his school's American football team and became interested in politics.
At the age of 12, Kim was campaigning in support of George McGovern, the anti-Vietnam war underdog who won the Democratic nomination to run for president in 1972.
McGovern was demolished by Richard Nixon but Kim says he loved his brush with politics, and it left him wanting to go further. His father had other ideas, as Kim recounted in a 2006 interview.
"I remember the first time I came back from college at Brown University, we were driving in the car and my father, just making conversation, said: 'What do you think you want to study?' And I said, you know, I think I want to study philosophy – my mother was a philosopher.
"So he pulled the car over and said: 'When you finish your medical residency you can do anything you want.' I think all immigrant families understand this to an extent, that your parents want you to do something safe – to have a skill that no one can take away from you."
Harvard offered a joint degree in medicine and anthropology, allowing him to satisfy both aims, although he later admitted: "For me, going to medical school was not the one thing in the world I wanted to do."
Kim wrote his PhD thesis on South Korea's economic development. In a recent article in the Financial Times, Kim said: "I have seen how integration with the global economy can transform a poor country into one of the most dynamic and prosperous economies in the world."
But the difficulties of healthcare in the developing world were what first concerned him. At medical school he became friends with another student, Paul Farmer, and in 1987 they and others launched Partners in Health, a charity that fought tuberculosis, first in Haiti and later in other hard-to-reach places such as Siberian prisons.
That experience led to his appointment to the World Health Organisation, where he became director of the HIV-Aids department.
Kim's time at the WHO included his championing of an initiative that could be a template for his tenure at the World Bank: the "3 by 5" programme, aiming to bring treatment for HIV-Aids to three million people in the developing world by 2005.
It was criticised as over-ambitious but Kim piloted the programme deftly enough to bring it to fruition. Although the programme missed its 2005 deadline, the task was completed by 2007 and remains a highlight in the global struggle against HIV-Aids.
A return to Harvard followed, until in 2009 Dartmouth College named Kim as its president, making him the first Asian-American to head an Ivy League university.
Kim's brief time at Dartmouth gives few pointers to how he will perform at the World Bank, although his administration has been criticised for failing to solve a long-running problem with student fraternity "hazing" or bullying.
To his critics, Kim's CV in academia and the non-profit sector fails to compensate for his lack of experience of finance and economics, given the World Bank's vital role as a financial institution.
But Kim's biggest task will be reinvigorating an organisation that has spent the past decade in the doldrums, through lacklustre leadership and a diminished role.
Few can doubt Kim's commitment to social justice. As he once told an interviewer: "I feel like almost every day I'm doing political social justice work. That's what I do every day with my life."
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