Asia could see rapid economic recovery: IMF Chief
JAPAN: Asia could enjoy a rapid economic recovery next year once the
rest of the world claws out of recession, IMF managing director
Dominique Strauss-Kahn said on Tuesday.
“Once the world economy regains its footing a rapid recovery is
possible,” he said, predicting Asian economic growth of more than 5.0
percent in 2010, almost twice the pace expected in 2009.
Asian countries cannot begin to recover until the rest of the global
economy escapes from the current “major downturn” because they rely
heavily on exports, the head of the International Monetary Fund said.
Asia was likely to post economic growth of 2.7 percent this year,
with the region’s developing countries seen expanding 5.5 percent,
Strauss-Kahn said, speaking to an online briefing from Washington.
“But it’s very uncertain and a worse outcome cannot be ruled out,” he
said.
Once the US and European economies start to rebound, however, some
Asian economies “may recover very fast,” he added.
“Some Asian economies are really dynamic. They have a lot of
resources. They have very strong fundamentals.”
Interest rate cuts and government spending would help spur the
recovery in Asia, whose banks are not suffering problems on the same
scale as their US and European peers, Strauss-Kahn said.
He said certain countries in the region, including China, have more
room for fiscal measures to stimulate their economies.
China would find it “very challenging” to meet its target of 8.0
percent economic growth this year although it is not impossible,
Strauss-Kahn said, reiterating the IMF’s own forecast for 6.7 percent
Chinese growth in 2009.
China’s economy faces a lot of “painful changes” as a result of the
global slowdown, he warned.
“But those changes are obviously for the good and in the interest of
the people of China. It has to be done.”
In the longer term China and the rest of Asia need to reduce their
dependence on exports and stimulate domestic demand, but this is a
difficult task that will take some time to achieve, he added.
The IMF chief also warned countries not to turn to protectionism
during the economic slump, saying: “Beggar thy neighbour policies will
never give a good result.”
Proponents of free trade fear that the global economic crisis and the
subsequent wave of job cuts could prompt governments to pursue policies
that favour national companies and reduce global trade flows.
Tokyo, Tuesday, AFP
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