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Asia should be ready to tighten policies: IMF

Kuala Lumpur overheating pressures emerge, while remaining alert to any future shocks from a still volatile global climate.

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The International Monetary Fund said in its World Economic Outlook report earlier this month that Asia’s growth prospects had dimmed but the region would avoid a hard landing this year thanks to strong domestic demand and monetary flexibility.

Regional growth would flatten out at six per cent this year, from 5.9 per cent in 2011, before reviving to 6.5 per cent in 2013, it said, still much ahead of growth rates in the advanced economies.

But Anoop Singh, director of the IMF’s Asia Pacific department, warned on Friday that export-dependent Asia could be hit should there be another slump in advanced economies, as well as by volatile commodity prices, especially high oil prices, and volatile capital flows. “Continued volatility are the risks I see for Asia looking ahead,” Singh said when launching IMF’s Regional Economic Outlook, a separate report following the World Economic Outlook, in Kuala Lumpur.

He added “overheating pressures” could develop in the second half of this year so that policymakers should be ready to adjust their policies to support stable, non-inflationary growth.