Typical street scene in Santa Ana, El Salvador. (Photo: iStock)
October 4, 2009
Asia is emerging from the global downturn faster and stronger than any other region, according to a top official at the International Monetary Fund.
Shopping in Japan. The IMF is establishing a regional advisory group, made up of renowned economic experts from Asia (Gideon Mendel/CORBIS)
REGIONAL ECONOMIC BRIEFING
Growth in the region is expected to reach 2.8 percent this year, increasing to 5.8 percent in 2010, with emerging economies such as China and India turning around even more strongly.
“Despite a difficult first quarter in the region, an economic turnaround now appears under way in many parts of Asia,” said Anoop Singh, Director of the IMF’s Asia and Pacific Department, during a press briefing at the IMF-World Bank Annual Meetings in Istanbul on October 4. The IMF published its global forecast on October 1.
Asia’s turnaround
Singh said Asia's economic rebound had been helped by swift and forceful action from policymakers, including robust government spending, monetary accommodation, and measures to restore and stabilize financial markets.
“The fiscal stimulus in Asia was substantial—larger than the G-20 average—and was quickly deployed,” he said, referring to the Group of 20 industrialized and emerging market countries.
The Asian region was severely hit through both trade and financial channels during the slump. Exports fell throughout the region, capital flowed out of Asia, and industrial production dropped precipitously.
The turnaround began in the first half of this year, with growth rising to 2½ percent for the region as a whole in the second quarter. The IMF official expected around half of the region’s growth this year would come from strong public sector demand, more than offsetting the drag from net exports.
Protecting the recovery
However, Singh warned against a premature withdrawal of stimulus that might threaten Asia’s economic recovery.
“Many countries in Asia have had a long history of fiscal discipline and this affords them significant scope to continue providing fiscal support to the economy,” he added.
“The region’s central banks also have the room to maintain accommodative monetary conditions until there are clear signs of a sustained growth in private demand,” said Singh.
Singh called on policymakers in the region to focus on bolstering private demand, noting that, looking ahead, “the impetus for Asia will need to come from within and policymakers will have to carefully manage the transition from public-led to private-sector-led, domestic demand growth.”
Full engagement
Singh also underlined the IMF’s full engagement with the region. He said the IMF’s surveillance work was being enhanced to include a stronger regional focus, its lending facilities had been redesigned to better meet the needs of countries in the region and elsewhere, and the organization was providing significant resources to Asia through the SDR allocation and programs in Sri Lanka and Mongolia.
He added that Asia would benefit from the commitment made at the recent G-20 Summit to increase IMF voting rights for emerging markets and developing economies.
“This will give Asia a larger voice in the IMF in accordance with its weight in the global economy” said Singh.
Singh also indicated that the IMF’s Asia and Pacific Department is establishing a regional advisory group for the first time—made up of renowned economic experts from Asia—that will meet regularly and provide the IMF with advice on important issues that could raise its surveillance role in the region.
Comments on this article should be sent to imfsurvey@imf.org
