Statement by IMF Managing Director Dominique Strauss-Kahn at the Conclusion of his Visit to Hong Kong SARPress Release No. 10/12
January 20, 2010
Mr. Dominique Strauss-Kahn, Managing Director of the International Monetary Fund (IMF), issued the following statement today in Hong Kong SAR:
“It has been a great pleasure for me to make my first visit to Hong Kong SAR as Managing Director of the IMF. During this visit, I addressed the Asian Financial Forum (see Press Release No. 10/10) in response to an invitation from the government, and I took the opportunity to have fruitful discussions with Chief Executive Donald Tsang, Financial Secretary John Tsang, and Chief Executive of the Hong Kong Monetary Authority Norman Chan.
“The success of Asian reforms in recent decades can be clearly seen in how the region has weathered the global crisis effectively and is now leading the world into recovery. Several of the world’s most dynamic economies are here in Asia. A more balanced and representative international financial order will necessarily feature a larger role for Asia, and other countries are also eager to learn from Asian experience in growth and development. To discuss some of these themes, the Fund is co-sponsoring with the Government of Korea an Asia Conference in Seoul in July 2010 that will recognize Asia’s economic leadership and the re-engagement of the region with the Fund.
“With regard to Hong Kong SAR, I was very impressed with the progress that the economy has made in recovering from the global financial crisis and the sharp economic contraction that started a year ago. The recovery has owed much to the government’s useful measures as well as to supportive external forces, such as the strong recovery in China and the inflows of liquidity related to U.S. credit easing. The uncertain global economic outlook poses a lingering risk for Hong Kong SAR, however, as it does for the rest of the world.
“I was also impressed with how the banking system has withstood the crisis, thanks both to sound prudential supervision and regulation and to the banks’ own prudence. In my meetings with officials, I noted that strong capital inflows and the resulting overhang of liquidity in the financial system could lead to rapid credit growth that in turn unduly drives up asset prices and creates macroeconomic volatility. I thus welcomed the authorities’ contingency efforts to preempt asset price bubbles, including the countervailing prudential measures that they announced in late 2009 with respect to the luxury housing market that should help mitigate asset price cycles, as well as their ongoing efforts to increase land availability.
“Overall, I was reminded again of the resilience of the Hong Kong SAR economy, based on the flexibility of Hong Kong SAR’s goods, labor, and financial markets and its strong institutions. These aspects will serve the economy well as it seeks to meet new challenges in the future.”