Southeast Asian finance ministers vowed vigilance toda in the face of economic risks such as capital outflows caused by the US Federal Reserve's "tapering" of its massive monetary stimulus.
Officials said the 10-member Association of Southeast Asian Nations (ASEAN) was well-placed to withstand the winding down of the US quantitative easing programme, at a meeting that underscored host Myanmar's return to the international diplomatic stage.
The region's economic outlook "remains robust, anchored by rising domestic demand stemming from private consumption and infrastructure investment," the ministers said in a joint statement.
"We remain vigilant in managing the downside risks, including capital outflows, volatile currency movements, emerging inflationary pressures and tightening financial conditions, which could dampen economic growth," they added.
Some emerging economies, such as Indonesia, suffered sharp capital outflows and losses to their currencies after the Fed began to reduce its massive stimulus programme, as the world's largest economy emerges from a crippling financial crisis.
Indonesian Finance Minister Chatib Basri said that, as well as the tapering, the region must be ready for the possibility of the Fed raising its policy interest rate in the future.
"This may have an impact on the capital outflows from emerging markets, including ASEAN, back to the US," he told reporters.
But he added that ASEAN has made preparations for the shift in US policy, stressing the importance of tackling fiscal and current account deficits as well as maintaining sound financial institutions.
Under quantitative easing, the Fed "creates" money to buy government debt from financial institutions, which helps lower long-term interest rates, in theory stimulating the economy by encouraging companies and individuals to borrow.
Last month the US central bank reduced its stimulus spending by another USD 10 billion, to USD 55 billion a month, saying the economy was strong enough to support an improving jobs market.
