HUA HIN (Thailand) Southeast Asian leaders` calls for action on the global financial meltdown will likely have little effect on whether their export-driven economies can ride out the crisis, analysts said.
The 10-member Association of Southeast Asian Nations (Asean) issued a joint statement following their annual summit on Sunday urging cooperation, reform of international financial systems and a fight against protectionism.
But with demand for the region`s products slumping in its main markets in the United States and Europe, the bloc appears increasingly powerless to protect the millions of jobs at risk in its member countries.
“They can try to keep a brave face... There`s not much collective action they can take,” David Cohen, Singapore-based regional economist with research house Action Economics, said.
“I don`t think it (the statement) will make very much immediate difference. The problems are so overwhelming right now,” he added.
Formerly a relative bright spot in the slumping global economy, Southeast Asia has started to feel severe effects from the economic crisis sweeping the rest of the world.
Singapore is already in recession and its exports fell 35 per cent in January the biggest drop since the government began keeping year-on-year records more than 30 years ago.
Thailand, the region`s second biggest economy, saw its economy shrink in the last quarter of 2008 and Prime Minister Abhisit Vejjajiva warned on Sunday that it was likely to do so again in the first three months of year.
One of the few concrete steps taken by Asean so far is to agree with China, Japan and South Korea last month to expand an emergency currency fund expected to be set up later this year to $120 billion.
But this shows that the region is still “using the lens” of the 1997 Asian financial crisis, when currency speculation was the root problem, said Bridget Welsh, a regional specialist at Johns Hopkins University in the United States.
“Asean still appears in economic denial,” Welsh said.
“The first step is dialogue and this is happening, but the measures coming out of Asean to date pale in their effect and show little appreciation of the seriousness of the econo- mic effects on the region.” The only other major step, a free trade deal with Australia and New Zealand signed by Asean on Friday, was “very symbolic and lacks substance”, Welsh said.
Thailand`s Abhisit outlined further steps on Sunday, including that Asean members should keep each other informed of their economic policies and that they should closely monitor for any hints of protectionism.
Asean`s plans to form an EU-style community by 2015 confirmed in a declaration signed by its leaders on Sunday were a vital step to protect against future economic problems, Thai analyst Aat Pisanwanich said.
“We should stimulate domestic consumption in Asean countries and we reduce dependence on the US and European Markets,” said Aat, director at the centre for international trade studies at the University of the Thai Chamber of Commerce.
But Cohen said that with governments mainly looking after their own economies, Asean`s calls for regional and international cooperation were likely to fall on deaf ears.
“Perhaps we can see in the upcoming G20 meeting next month in London whether there`s any agreement for some coordinated global response,” he said.
“Frankly, there`s not much Asean can do right now.”—AFP