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BOJ chief upbeat on Asia's economy, points to bank resilience

BOJ chief upbeat on Asia's economy, points to bank resilience

Japanese Finance Minister Shunichi Suzuki and Governor of the Bank of Japan Kazuo Ueda attend the 26th ASEAN+3 Finance Ministers and Central Bank Governors' meeting in Incheon, South Korea, on May 2, 2023. (Photo: Reuters/Kim Hong-Ji)

INCHEON, South Korea: Bank of Japan Governor Kazuo Ueda said on Tuesday (May 2) the downside risks to Asia's economy were smaller than those to other parts of the world, partly due to the region's resilience to US and European banking sector woes.

His remarks underscore optimism over the outlook for Asia's economy, which has a big influence on Japan's fragile recovery due to its proximity and huge market size.

"The risks Asia faces are smaller than those for other regions," Ueda told a briefing after attending a meeting of finance leaders from the ASEAN+3 - which comprises the 10-member Association of Southeast Asian Nations (ASEAN) and Japan, China and South Korea.

While Asian policymakers must be vigilant to the potential fallout from US and European banking sector woes, the region's financial institutions have sufficient capital buffers and have little exposure to the problematic banks, he said.

"But policymakers must guard against possible spillovers from uncertainties over US and European economies," he said.

Global recession risks are among the key factors that will likely determine how soon the BOJ phases out its massive stimulus programme.

Asia has been among the few bright spots in the global economy as China's rebound, thanks to the end of COVID-19 lockdowns, underpins the region's consumption and exports.

The ASEAN+3 economies grew by 3.2 per cent in 2022 and are expected to expand by 4.6 per cent in 2023, led by robust domestic demand, the group's joint statement said on Tuesday.

But Ueda said the group's finance leaders also discussed risks associated with China's outlook.

"China's economy is in good shape now due to the re-opening. But from a somewhat medium- to long-term perspective, there's a chance geo-political risks could hurt growth and have negative effects on the region's economy," Ueda said.

Source: Reuters/at

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