Emerging markets like India and China are witnessing a remarkable transformation, despite a slowdown in economic growth, lifting millions of people out of poverty, Federal Reserve Chairman Ben Bernanke has said.
"In the emerging markets, you have a variety of different stories, but I think the fundamentals there, in the emerging markets, are pretty good, and even if there's some moderation of growth in some countries, we are seeing overall a rather remarkable transformation of places like China and India, which has been the biggest anti-poverty programme in history," he said yesterday.
"The growth in those countries has lifted many millions of people out of poverty. So, I think growth will proceed in those areas as well, with each country, each region – Latin America, Asia – dealing with different sets of issues," he said in his remarks on 'Monetary Policy, Recovery from the Global Financial Crisis and Long-Term Challenges Facing the US Economy' at the University of Michigan, Ann Arbor. Globally, he said, the different parts of the world that are facing slowdowns, each has to address its own set of issues.
"In Europe, some progress has been made in addressing their sovereign debt and banking issues that they have. The European Central Bank has taken some important steps to try to stabilise the financial markets there have been helpful," he said.
"They're working on improving their fiscal arrangements, both to create longer-term sustainability in individual countries, but also to put up a set of agreements under which countries will be willing to work with each other on fiscal matters," Bernanke said.
"They (in Europe) are working to develop a banking union where bank regulation would be done throughout the euro-zone by the ECB or some other agency, and that would strengthen the European banking system and make it less dependent on the individual countries.
So steps are being taken in Europe which I hope will help stabilise that situation over time," Bernanke said in response to a question.
Stating that global growth has been somewhat slower for a variety of reasons, he said much of Europe is in at this point following the very difficult financial problems.
"Some emerging market economies have slowed for a variety of reasons. The slowdown in China was at least partly a policy goal to try to create a more sustainable and stable growth path and to try to shift the sources of demand in China from foreign buyers – exports – to domestic demand," he said.