Statement by the IMF Managing Director Dominique Strauss-Kahn at the Conclusion of his Visit to MalaysiaPress Release No. 09/29
February 7, 2009
Mr. Dominique Strauss-Kahn, Managing Director of the International Monetary Fund (IMF), visited Malaysia on February 6-7, 2009. He issued the following statement in Kuala Lumpur at the conclusion of his visit:
"I have had the honor to attend the 44th South East Asian Central Banks (SEACEN) Conference in Kuala Lumpur. I exchanged views with Governor Zeti of Bank Negara Malaysia, whom I congratulated on the 50th anniversary of the establishment of Bank Negara, other regional central bank governors, and Malaysia's Deputy Prime Minister Najib Razak. Our discussions focused on recent global economic developments, the challenges facing the region, and how macroeconomic policies should respond to the evolving economic realities.
"We met at a difficult time for the world economy. Last week the IMF released projections that show that global growth will be close to zero, which, if realized, would be the lowest rate in the postwar period. Because Asia's open economies are especially vulnerable to falls in demand in the United States and Europe, the region's growth will be affected, while remaining positive.
"To contain this crisis we need urgent action around the world. We need financial market measures, in order to get credit flowing again. We need monetary and fiscal policy measures, to offset the abrupt fall in private demand. And we need liquidity support for some emerging market countries, to reduce the adverse effects of the widespread capital outflows triggered by the financial crisis. These policies need to be implemented in the context of preserving an open trading system.
"Asian policymakers have risen forcefully to these challenges. In all the major countries, substantial monetary and fiscal stimulus is underway, tailored to their individual circumstances and with a watchful eye to medium-term fiscal sustainability. Much improved fundamentals over the past decade give most Asian economies considerable room to mount a counter-cyclical policy response. In fact, many countries in the region have room to increase further their efforts to support growth. Macroeconomic policies are also being supplemented with measures to safeguard domestic financial systems.
"More broadly, many countries in Asia need to do more to raise domestic consumption demand over the medium term. This will lessen Asia's reliance on export-led growth and improve its resilience to external shocks. Achieving these goals would require, however, important changes in the policy mix in many countries.
"For its part, the Fund has recently stepped up its financial support for some emerging market members and many low-income countries, just as capital flows to these economies have been reversing and corporates have experienced heightened stress. And we are ready to do more.
"Asia's legendary economic dynamism and strong integration with the global trade and financial system should deliver a rapid recovery once the world economy regains its footing."