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IMF / ASIA ECONOMIC OUTLOOK
STORY: IMF / ASIA ECONOMIC OUTLOOK
TRT: 2.33
SOURCE: INTERNATIONAL MONETARY FUND (IMF)
RESTRICTIONS: NONE
LANGUAGE: ENGLISH / NATS
DATELINE: 28 APRIL 2011, WASHINGTON, DC
RECENT, WASHINGTON, DC
1. Wide shot, exterior IMF headquarters
28 APRIL 2011, WASHINGTON, DC
2. SOUNDBITE (English) Anoop Singh, Director Asia Pacific Department, International Monetary Fund (IMF):
“What’s interesting is Asia remains a growth leader and it should continue to be the growth leader. What we’re seeing is the drivers of growth are not only exports but also domestic demand. There are risks ahead but we see that across Asia there will be a healthy rate of growth even after this post-crisis recovery.”
FILE / RECENT, HYDERABAD, INDIA
3. Med shot, shopkeeper folds fabric
FILE / RECENT, HONG KONG
4. Wide shot, bus travels down street
5. Wide shot, pedestrians cross street
28 APRIL 2011, WASHINGTON, DC
6. SOUNDBITE (English) Anoop Singh, Director Asia Pacific Department, International Monetary Fund (IMF):
“In fact there are higher downside risks. Let’s start with Japan. Depending how long the industrial dislocation continues in Japan there will be regional effects through the global supply train. And we have seen through the Middle East and North Africa effects on global energy prices. We’ve also seen globally higher food prices. Both of these have raised the issues and the challenges for Asia that we explore in this regional outlook.”
FILE / RECENT, TOKYO, JAPAN
7. Various shots, people look at stock market figures in a brokerage
8. Wide shot, passengers in a train station
9. Wide shot, people walk through a market
28 APRIL 2011, WASHINGTON, DC
10. SOUNDBITE (English) Anoop Singh, Director Asia Pacific Department, International Monetary Fund (IMF):
“It’s a very important issue. It’s linked to what is said about global food prices. On the one hand, we see in Asia that almost across the region output gaps have closed. This comes at a time of higher food prices. What this has done, put together, it has raised inflationary expectations, and we’ve seen in Asia how food price inflation is beginning to feed into core inflation. This is an important challenge to address at a time when we are seeing also overheating pressures in Asia.”
FILE / RECENT, JAKARTA, INDONESIA
11. Various street scenes
28 APRIL 2011, WASHINGTON, DC
12. SOUNDBITE (English) Anoop Singh, Director Asia Pacific Department, International Monetary Fund (IMF):
“Capital flows have moderated but for some countries they remain high and very important. I think Asia is dealing with this. They know they have more room on macroeconomic policies. They are taking prudential measures, so put together, I think, in a short run they are addressing these capital flow pressures and most importantly they are building infrastructure that increases the absorptive capacity in Asia of capital inflows.”
RECENT, WASHINGTON, DC
13. Wide shot, exterior IMF
After reaching a rate of 8.3 percent in 2010, GDP growth in Asia is projected to average nearly seven percent in both 2011 and 2012, according to the IMF. Although the earthquake-related tragedy in Japan in mid-March caused terrible losses of life and property, the government’s response helped to contain the economic impact, and spillovers to activity in the rest of Asia through the supply chain should be limited.
But in its regular report on the economic outlook of the Asia and Pacific region, the IMF warns that Asia’s rapid recovery from the global economic crisis has been accompanied by pockets of overheating across the region.
“What’s interesting is Asia remains a growth leader and it should continue to be the growth leader. What we’re seeing is the drivers of growth are not only exports but also domestic demand. There are risks ahead but we see that across Asia there will be a healthy rate of growth even after this post-crisis recovery,” said Anoop Singh, Director Asia Pacific Department at the IMF.
At the launch of the IMF’s twice-yearly Regional Economic Outlook, Singh said economic growth in Asia was expected to remain robust, fuelled by both exports and domestic demand, but new risks had emerged, including the threat of inflation.
“In fact there are higher downside risks. Let’s start with Japan. Depending how long the industrial dislocation continues in Japan there will be regional effects through the global supply train. And we have seen through the Middle East and North Africa effects on global energy prices. We’ve also seen globally higher food prices. Both of these have raised the issues and the challenges for Asia that we explore in this regional outlook,” Singh said.
Singh said that the IMF expects inflation in many Asian countries to increase further in 2011 before decelerating modestly in 2012.
“It’s a very important issue. It’s linked to what is said about global food prices. On the one hand, we see in Asia that almost across the region output gaps have closed. This comes at a time of higher food prices. What this has done, put together, it has raised inflationary expectations, and we’ve seen in Asia how food price inflation is beginning to feed into core inflation. This is an important challenge to address at a time when we are seeing also overheating pressures in Asia,” Singh said.
Against this background, Singh said the need to tighten macroeconomic policies in Asia had become more pressing that it was six months ago.
He added that there was also room for further fiscal consolidation and exchange rates appreciation that would help contain inflationary pressures.
While the task of monetary tightening has been complicated by the surge of capital flows to Asia after the global crisis, their recent moderation gives central banks more room to raise rates. Capital is expected to continue flowing into Asia in 2011 and 2012, attracted by the region’s strong growth prospects and fueled by abundant global liquidity and risk appetite, but at a more moderate pace than in 2009 and early 2010.
Still, increased volatility of capital inflows, especially debt related inflows, “remains a key concern,” for a few regional economies where these flows have been particularly large, says the Regional Economic Outlook.
“Capital flows have moderated but for some countries they remain high and very important. I think Asia is dealing with this. They know they have more room on macroeconomic policies. They are taking prudential measures, so put together, I think, in a short run they are addressing these capital flow pressures and most importantly they are building infrastructure that increases the absorptive capacity in Asia of capital inflows,” Singh said.
The report notes that several Asian economies have introduced macroprudential measures aimed at reducing the risk of overheating in asset markets, and any subsequent bust if capital flows reverse, including measures that have reduced banks and household leverage, or cooled down property markets
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