{
  "title": "Asia: Exiting from Stimulus in an Uncertain World",
  "publication": "IMF Blog, May 12, 2010",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2010/05/12/asia-exiting-from-stimulus-in-an-uncertain-world",
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  "summary": "Author: Anoop Singh",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Author: Anoop Singh\n- Date: May 12, 2010\n- Context: Presentation of the Asia-Pacific Regional Economic Outlook in New Delhi; Asia leading the global recovery but vulnerable to global downside risks, particularly recent developments in Europe and pervasive financial market volatility."
    },
    {
      "heading": "Key findings on the recovery and risks",
      "content": "- Asia is recovering ahead of and faster than advanced economies and is an important driver of the global recovery.\n- Asia’s growth is highly dependent on export demand and growing integration with international financial markets, exposing the region to global downside risks.\n- Recent financial market volatility and developments in Europe bring downside risks back to the forefront.\n- Despite relatively strong recent performance, “we are not yet out of the woods.”"
    },
    {
      "heading": "Guidance on the pace of exit (monetary and fiscal normalization)",
      "content": "- Main near-term challenge: judge the appropriate pace for normalizing monetary and fiscal policy conditions against an uncertain global backdrop.\n- Because Asia is recovering earlier and faster, policy conditions in the region will need to start normalizing sooner than in several other parts of the world.\n- Withdrawal of stimulus should be cautious and gradual given the fragility of the global recovery.\n- The right pace of “exit” differs across economies and depends on the stage of the cycle and exposure to risks."
    },
    {
      "heading": "Monetary policy considerations",
      "content": "- Pace of monetary normalization should be guided by:\n  - the degree of monetary accommodation that is still in place,\n  - the pace at which output gaps are closing,\n  - the emergence of inflationary pressures.\n- Economies with less economic slack and smaller exposure to external demand can normalize faster than those far from capacity constraints or highly exposed to uncertain external demand.\n- A pick-up in consumer price inflation in a few economies, including India, in recent quarters requires monitoring.\n  - Part of the pick-up is due to food and energy prices.\n  - Part is due to rising “core” prices, indicating inflationary pressure spreading beyond volatile components."
    },
    {
      "heading": "Complications from monetary tightening and large capital inflows",
      "content": "- Monetary tightening risks attracting further capital inflows that could complicate macroeconomic management.\n- Possible measures to manage large inflows (already used by many in the region) include:\n  - prudential regulations to address unduly rapid rises in asset prices (equity and property),\n  - greater exchange rate flexibility."
    },
    {
      "heading": "Fiscal policy stance and medium-term considerations",
      "content": "- Many Asian economies plan to withdraw part of the crisis-era stimulus this year, but fiscal conditions are expected to remain accommodative in most of Asia.\n- Gradual removal of fiscal stimulus is appropriate given low levels of public debt in most of the region (Japan is an exception).\n- Given large downside risks, retaining some targeted fiscal measures to support growth is prudent risk management.\n- Policymakers should plan to move to a more neutral fiscal stance over the medium term to:\n  - safeguard fiscal space for future shocks,\n  - maintain policy credibility and effectiveness.\n\nAnoop Singh, May 12, 2010.\n\n---\n\n\n References\n\n- China\n- Regional Economic Outlook\n- leading the global recovery\n- developments in Europe\n\nSource: https://www.imf.org/en/blogs/articles/2010/05/12/asia-exiting-from-stimulus-in-an-uncertain-world"
    }
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    "Authors: Anoop Singh",
    "Published: May 12, 2010",
    "Author: Anoop Singh",
    "Date: May 12, 2010",
    "Context: Presentation of the Asia-Pacific Regional Economic Outlook in New Delhi; Asia leading the global recovery but vulnerable to global downside risks, particularly recent developments in Europe and pervasive financial market volatility.",
    "Asia is recovering ahead of and faster than advanced economies and is an important driver of the global recovery.",
    "Asia’s growth is highly dependent on export demand and growing integration with international financial markets, exposing the region to global downside risks.",
    "Recent financial market volatility and developments in Europe bring downside risks back to the forefront.",
    "Despite relatively strong recent performance, “we are not yet out of the woods.”",
    "Main near-term challenge: judge the appropriate pace for normalizing monetary and fiscal policy conditions against an uncertain global backdrop.",
    "Because Asia is recovering earlier and faster, policy conditions in the region will need to start normalizing sooner than in several other parts of the world.",
    "Withdrawal of stimulus should be cautious and gradual given the fragility of the global recovery.",
    "The right pace of “exit” differs across economies and depends on the stage of the cycle and exposure to risks.",
    "Pace of monetary normalization should be guided by:",
    "Economies with less economic slack and smaller exposure to external demand can normalize faster than those far from capacity constraints or highly exposed to uncertain external demand.",
    "A pick-up in consumer price inflation in a few economies, including India, in recent quarters requires monitoring.",
    "Monetary tightening risks attracting further capital inflows that could complicate macroeconomic management.",
    "Possible measures to manage large inflows (already used by many in the region) include:",
    "Many Asian economies plan to withdraw part of the crisis-era stimulus this year, but fiscal conditions are expected to remain accommodative in most of Asia.",
    "Gradual removal of fiscal stimulus is appropriate given low levels of public debt in most of the region (Japan is an exception).",
    "Given large downside risks, retaining some targeted fiscal measures to support growth is prudent risk management.",
    "Policymakers should plan to move to a more neutral fiscal stance over the medium term to:",
    "[China](http://blogs.imf.org/2010/04/29/asia-leading-the-global-recovery/)",
    "[Regional Economic Outlook](http://www.imf.org/external/pubs/ft/reo/2010/APD/eng/areo0410.htm)",
    "[leading the global recovery](http://www.imf.org/external/region/apd/index.htm)",
    "[developments in Europe](http://www.imf.org/external/pubs/ft/survey/so/2010/NEW051110A.htm)"
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