Press Release: IMF Managing Director Dominique Strauss-Kahn Says Asia Can Lead Global Economic Transformation
January 20, 2010Press Release No. 10/10
January 20, 2010
Asia is leading the world in recovery from the global economic crisis and, in the coming years, the region's continued dynamism can give it an even greater role, said IMF Managing Director Dominique Strauss-Kahn, speaking at the Asian Financial Forum in Hong Kong. “Now is the time for Asia to contribute even more to the shaping of the post-crisis global economic landscape,” he said. “Potentially, this is a historic moment for Asia. A moment of transformation.”
To sustain its strong growth performance, Mr. Strauss-Kahn observed that Asia—like the rest of the world—would need to adapt to the new challenges presented by the post-crisis economy. He said that many Asian countries are already “moving rapidly to identify the key elements of a new model that can deliver sustained growth.” This included the realization that there are limits to the pace of export growth and that domestic and regional demand would need to play an increasingly important role in underpinning Asia's growth.
“This does not mean that Asia should become inward-looking,” he emphasized. “Rather, it means reinvigorating domestic demand and boosting intra-regional trade. Such a recalibration of Asia’s growth model is in the region's self-interest, since it would reduce its dependence on demand from outside Asia. It is also in the global interest.”
Mr. Strauss-Kahn set his comments on Asia in the context of the major economic challenges facing the world. “2010 is going to be a crucial year,” he said. “The first year when countries can lift their eyes to the longer-term horizon.” In terms of the policies needed to build a stronger and more sustainable global economy, he pointed to three issues in particular:
• Maintaining the momentum of reform in the financial sector, including stronger—and smarter—regulation and supervision. “We cannot return to business as usual,” he said.
• Identifying new sources of growth that can help rekindle private demand. Here he pointed to the need for labor and product market reforms that can boost productivity. “Efforts to boost the 'green' economy can also support this restructuring effort,” he said.
• Strengthening international policy collaboration is also essential. Mr. Strauss-Kahn said that the G20's “mutual assessment framework” is an important step in the right direction—a process aimed to ensure that the world's largest economies will be accountable to each other to ensure strong, stable and sustainable growth. “The IMF is providing analytical support for this innovative approach to multilateral cooperation,” he added. “And I believe that this new framework can be one of the keys to the transformation of the global economy in 2010 and beyond.”
The IMF Managing Director noted that the IMF had changed a lot over the past two years in order to speed its response to the crisis—reforming its lending instruments, streamlining conditionality, and improving its governance. He promised further change in 2010, including “looking at a fundamental reform of our mandate—focusing more on systemic, not just country-specific risks, especially in the financial sector; and developing financing instruments that provide the insurance needed to tackle modern crises.”
He added that Asia's role also is increasing at the IMF—with its quota and voice being brought more into line with its weight in the global economy.
“As Asia’s economic power grows, so too does Asia's interest in promoting the successful performance of the global economy” said Mr. Strauss-Kahn. “And as the region enhances its role in the global policy debate, I see great potential for the world to benefit from Asia's ideas and experiences. We all have a lot to learn from Asia.”
In this context, he noted that, along with the Government of Korea, the IMF is organizing a high-level conference on Asia’s economic dynamism to be held in Seoul in July 2010.