Philippine Central Bank Governor Eli Remolona called on Asian economies to strengthen their preparedness to confront financial crises, warning that the large capital inflows that the region attracted before the crisis of the late 1990s should not be interpreted as evidence of sustainable growth, at a time when Asian economies face new risks linked to rising energy prices and global trade tensions.
Remolona said, during a discussion session organized by the International Monetary Fund on the prospects for the economies of the Association of Southeast Asian Nations (ASEAN), on the sidelines of the annual meetings of the Fund and the World Bank in Bangkok, that large investment flows to the region preceded the Asian financial crisis that broke out in 1997, after international institutions described it at the time as “the economic miracle of East Asia.”
He added that the crisis showed that this boom was not necessarily a sustainable economic miracle, calling on countries in the region to remember its lessons and intensify efforts to prevent the recurrence of such crises.
On the other hand, the Director of the Asia and Pacific Department at the International Monetary Fund, Krishna Srinivasan, said that the Fund has made progress in developing tools to assess financial vulnerabilities and the transmission of the repercussions of shocks between economies, including developing frameworks to deal with fluctuations in capital flows and identifying conditions that may require intervention in foreign exchange markets.
Srinivasan pointed out that the ASEAN economies dealt with the trade tensions resulting from US tariffs with some degree of resilience, but he warned that the heavy dependence of some countries in the region on oil and gas imports makes them more vulnerable to the repercussions of energy shocks.
Energy and supply chains
For his part, Japanese Deputy Finance Minister for International Affairs, Atsushi Mimura, considered the energy shock resulting from the conflict in the Middle East, along with the rise in inflation, among the most prominent short-term risks facing the region’s prospects.
He stressed the need for financial support measures directed to mitigate the impact of rising energy costs on families and companies to be targeted, designed according to needs, and temporary, in a way that reduces pressures on public finances.
Mimura called on ASEAN countries to increase investments to diversify supply chains for vital minerals and energy, in light of the increasing competition with China, stressing Japan's readiness to support these efforts.
Economies also urged the region to boost investment in innovation and artificial intelligence, pointing to its position in digital transformation supply chains thanks to its production of vital minerals used in technology industries.
ASEAN includes 11 countries: Brunei, Cambodia, East Timor, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
Chinese exports jumped more than expected in September, putting the country on track to record a record annual trade surplus, at a time when pressure is mounting from the United States and the European Union to rebalance trade relations, amid Beijing’s continued reliance on foreign markets to compensate for weak domestic demand.
Data from the Chinese General Administration of Customs showed, on Wednesday, that exports rose by 36.3 percent year-on-year, exceeding the expectations of analysts surveyed by Bloomberg for an increase of 25.7 percent. Imports also rose by 31 percent, with the second largest economy in the world recording a trade surplus of $133.5 billion during the month, the largest since January 2025.
Thus, China's cumulative trade surplus from the beginning of the year until the end of September rose to $938.1 billion, putting it on track to exceed the record level of $1.2 trillion recorded last year.
The strong performance of exports reflects Beijing's continued reliance on external demand to achieve the annual economic growth target of between 4.5 and 5 percent, in light of relatively weak domestic demand, as retail sales rose only 0.4 percent on an annual basis in August.
Increasing trade pressures
The boom in Chinese exports is sparking increasing reactions from its major trading partners, especially the United States and the European Union, which are seeking to reduce trade imbalances with Beijing.
Chinese shipments to the United States rose by 39.6 percent during September, compared to low levels in the same month last year, after trade between the two countries declined following the imposition of mutual punitive customs duties.
Chinese exports to the European Union also increased by 25.3 percent, while imports from the bloc's countries remained stable, pushing China's trade surplus with the Union to new levels.
European officials described the bloc's trade deficit with China, which exceeds one billion euros per day, as "unsustainable," pledging to work to rebalance trade relations.
In this context, Chinese and European trade officials last week reached an agreement to limit Chinese hybrid car exports to Europe. But analysts believe that the agreement covers a limited share of bilateral trade, with the possibility that Brussels will expand the restrictions to include other strategic sectors.
Nguyen Hoang Nam, an economist on China at Capital Economics, said that the expansion of European restrictions may have a limited impact on the Chinese economy, according to the institution’s estimates.
On Wednesday, the markets are awaiting the release of US inflation data for September, amid expectations that the rise in consumer prices will accelerate to 3.6 percent on an annual basis, from 3.4 percent in August, driven by an increase in gasoline and food prices, at a time when the expected slowdown in core inflation may give the Federal Reserve room to keep interest rates unchanged at its meeting this month.
Economists polled by Reuters expected the consumer price index to rise by 0.6 percent in September, after increasing by 0.4 percent in August, raising the annual inflation rate to 3.6 percent, compared to 3.4 percent in the previous month. Gasoline prices were expected to contribute about three-tenths of a percentage point to the monthly increase, after jumping 7.1 percent during September, according to data from the US Energy Information Administration.
Food prices are also likely to have risen by at least 0.2 percent, after monthly increases of 0.1 percent during each of the previous two months.
In contrast, the rise in the core CPI, which excludes food and energy, is expected to slow to 0.2 percent in September, from 0.3 percent in August, as the impact of the previous increase in mobile phone service prices fades. However, this potential slowdown does not necessarily mean a decline in living pressures, as fuel and food prices remain the most prominent in families’ daily spending.
Sung Won Son, professor of finance and economics at Loyola Marymount University, said consumers are directly feeling the rise in food and energy prices, noting that lower-income families bear the brunt of these increases.
The data comes at a time of increasing fears that rising energy costs will be transmitted to other sectors, with expectations of an increase in airline ticket prices, continued pressure on service prices, and the possibility of rising diesel prices being reflected in the costs of transporting goods and their prices in stores.
Interest is under test
Inflation data is of particular importance to monetary policy, after the Federal Reserve raised the benchmark interest rate last month by 25 basis points, to a range between 3.75 and 4 percent, the first increase in three years, indicating the possibility of continuing to raise borrowing costs in the coming months.
But weak job growth in September, coupled with slower-than-expected PCE inflation readings during July and August, reduced the odds of a rate hike at the October meeting. The markets were pricing in a probability of about 22 percent for a rate increase during the meeting on October 27 and 28, according to the CME Group’s “Feed Watch” tool.
Scott Anderson, chief US economist at BMO Capital Markets, said that keeping the monthly increase in core inflation at 0.2 percent may be enough to keep rates unchanged in October, but it will not resolve the debate about the need for further increases later. Economists' expectations indicated the possibility of raising interest rates again in December.
An expected increase for Social Security beneficiaries
The importance of September's data extends to millions of retirees and Social Security beneficiaries, as CPI data for urban wage earners and white-collar workers during the third quarter is used to determine the annual increase in benefits for 2027.
The Senior Citizens Association, one of the largest American organizations concerned with this category, expects the cost of living for beneficiaries to increase by 3.5 percent in 2027, compared to 2.8 percent in 2026. This increase would raise the average monthly benefit for retirees by about $67.90 to 2007 dollars.
