Nov. 10 (Bloomberg) -- Australia has “room to move” on monetary and fiscal policy as Europe’s worsening sovereign-debt crisis threatens the global economy, Treasurer Wayne Swan said.
Asia cannot depend on the U.S. and Europe for growth and the region is in a “much stronger position” than their counterparts, Swan told reporters in Honolulu today where he is attending the Asia-Pacific Economic Cooperation forum.
Asian policy makers have shifted their focus to shielding growth by boosting fiscal measures or lowering borrowing costs as Europe’s debt woes and a struggling U.S. economy increase the risk of another global recession. The world economy is in a “dangerous phase,” International Monetary Fund Managing Director Christine Lagarde said this week.
“Lower global growth means slower growth in our region and slower growth at home,” Swan said. “But fortunately, this region is in a much stronger position than Europe or the United States.”
He said “there is room to move in Australia when it comes to both monetary policy and fiscal policy” to cope with global uncertainty and volatility.
The Reserve Bank of Australia lowered rates this month for the first time since 2009 and cut its forecasts for economic growth and inflation for the next two years. The central bank said the risks to its economic forecasts “continue to be tilted to the downside, with a very disruptive outcome in Europe still possible.”
Private reports have showed Australian manufacturing and services fell in October, while the government said residential- building permits in September slumped the most since 2002 and house prices fell from June through September for a third consecutive quarter.
Inflation ‘Under Control’
Indonesia unexpectedly lowered its benchmark rate by half a percentage point at its meeting this week to shield its economy from a faltering global recovery. Bank Indonesia cut the reference rate to 6 percent, the biggest reduction since March 2009.
Inflation is “under control,” which allowed the central bank to reduce borrowing costs, Finance Minister Agus Martowardojo said in an interview in Honolulu today. The Indonesian economy may grow 6.5 percent this year, he said.
The Philippines has “fiscal space” to aid its economy if necessary, Finance Secretary Cesar Purisima told reporters in Honolulu today. Philippine President Benigno Aquino unveiled a 72 billion-peso ($1.7 billion) stimulus plan in October.
The country’s interest rates are low and the government isn’t considering capital controls at the moment, Purisima said. The Philippines kept its benchmark interest rate unchanged for a fourth meeting last month at 4.5 percent after increasing it twice earlier this year.
--Editors: Peter Hirschberg, Chris Bourke
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