Need to Balance Economic Growth in Asia

JAKARTA, KOMPAS.com - The high economic growth in Asia, which until the first half of 2010 reached 8 percent, could lead to inflationary pressures continue to increase. Therefore, Asian countries should normalize monetary and fiscal policy.
Thus disclosed the Director of the International Monetary Fund (IMF) for the Asia Pacific Department, Anoop Singh, on Thursday (10/21/2010), in a press conference at the IMF Representative Office in Bank Indonesia, Jakarta.

`We welcome the steps taken so far by the policy makers to control inflation risk, but now many things that can still be made considering the continued strong growth,` said Singh.

Regional Economic Outlook, shows the need for further tightening of monetary policy in many countries in Asia, including through exchange rate appreciation is greater. `The move more quickly to attract the fiscal stimulus is applied during the global financial crisis will also help guard against various risks that could cause the economy to overheat,` said Singh.

According to Singh, managing capital flows in the region is a difficult challenge because of capital flows offer many opportunities, but also carry a variety of potential risk to financial stability.

`Balancing the re-growth Asian economies remain the most important policy priority in the medium term,` said Singh.

He continued, given the external demand from developed countries less likely to return to pre-crisis levels in the near future, then Asia needs stronger domestic demand in order to continue on the path of growth.

`Various kinds of reforms needed to support domestic consumption and investment, including strengthening social safety nets, ensuring access to credit, reduce barriers to service sectors, as well as infrastructure improvements,` said Singh.

Exchange rate appreciation, he added, is an important part of the rebalancing process. `Naturally, with Asian economies grew stronger, their currencies will also be strengthened,` said Singh.

By : Anoop Singh (IMF Asia-Pacific)
Source : Compass