{
  "title": "Dealing with Uncertain Economic Times: The Outlook for Asia",
  "publication": "IMF Blog, October 13, 2011",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2011/10/13/dealing-with-uncertain-economic-times-the-outlook-for-asia",
  "canonical": "https://www.imf.org/en/blogs/articles/2011/10/13/dealing-with-uncertain-economic-times-the-outlook-for-asia",
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  "summary": "Author: Anoop Singh",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Author: Anoop Singh\n- Date: October 13, 2011\n- Key premise: Recent large equity sell-offs across Asia and safe haven flows into Japan illustrate the region’s vulnerabilities to further global shocks.\n- Exact quoted assessment from the IMF’s Managing Director: “what makes the situation all the more urgent is that it has implications for every country.”"
    },
    {
      "heading": "Regional outlook and immediate vulnerabilities",
      "content": "- The region’s fundamentals—built up over the past decade—remain relatively strong.\n- Economic uncertainties in Europe and the United States pose large downside risks.\n- Recent market behavior: large equity sell-offs across Asia and safe haven flows into Japan.\n- View from Tokyo is described as “more serene than the view from other advanced country capitals, but there are storm clouds on the horizon.”"
    },
    {
      "heading": "Policy balancing act",
      "content": "- Domestic demand in Asia has been rather resilient, in contrast to most advanced countries.\n- Factories are working at near full capacity and unemployment is low.\n- Overheating is the main concern in a number of economies, with credit growing strongly and inflation remaining stubbornly high.\n- Growth in Asia is slowing, mainly due to weakening external demand.\n- Policy challenge summarized: contend with softening exports, which act as a drag on growth, even as they seek to contain inflation and asset bubbles."
    },
    {
      "heading": "Guarding against spillovers",
      "content": "- Channels through which euro zone turmoil could affect Asia:\n  - Foreign investors could withdraw abruptly (to some extent this is already happening, but things could get much worse).\n  - Stressed European banks could withdraw funding from their local branches and cut back on cross-border lending.\n  - Key derivatives markets—on which some local banks have become reliant—could be impaired.\n- Potential consequence: impairment of dollar liquidity provision in Asian markets where European banks have been important providers."
    },
    {
      "heading": "Policy recommendations and flexible response",
      "content": "- Recommended stance: policymakers should react flexibly to domestic challenges amid an unsettled external environment.\n- Specific guidance:\n  - In overheating economies where monetary conditions are still loose, policies should be geared towards returning inflation to the target range.\n  - Policymakers should be willing to change direction quickly should downside risks materialize.\n  - In economies where inflation is under control and global financial linkages are greater, a pause in monetary tightening is warranted.\n- Comparative advantage noted: Asia’s fundamentals are good, and the scope for policy adjustments is much greater than in other regions of the world."
    },
    {
      "heading": "Special considerations for low-income and Pacific Island economies",
      "content": "- Asian low-income and Pacific Island economies face similar challenges, but often in a more acute form.\n- In low-income countries, the fight against inflation is complicated by strong second-round effects and less well anchored inflation expectations.\n- Pacific Island economies need to undertake further structural reforms to lift their potential growth."
    },
    {
      "heading": "Longer-term rebalancing",
      "content": "- Weak global demand highlights the benefit for Asia to rebalance growth towards domestic sources of demand.\n- Rebalancing is acknowledged as a long-term process, but efforts should start immediately.\n- Fiscal policy advice: re-prioritizing fiscal spending and directing public spending toward critical infrastructure investments.\n  - Expected outcomes of such spending: support rebalancing and help foster more inclusive growth."
    },
    {
      "heading": "Context about the publication",
      "content": "- Platform: IMFBlog, described as a forum for the views of IMF staff and officials on pressing economic and policy issues.\n- Organizational note: The IMF, based in Washington D.C., is an organization of 191 countries, working to foster global monetary cooperation and financial stability around the world.\n- Disclaimer: The views expressed are those of the author(s) and do not necessarily represent the views of the IMF and its Executive Board.\n\nSource: Dealing with Uncertain Economic Times: The Outlook for Asia — IMFBlog (Anoop Singh, October 13, 2011).\n\n---\n\n Content in this bundle\n\n- iMFdirect 博客: 应对不确定的经济时期, 亚洲的前景, 2011 年10 月13 日\n  - iMFdirect 博客: 应对不确定的经济时期, 亚洲的前景, 2011 年10 月13 日 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - iMFdirect 博客: 应对不确定的经济时期, 亚洲的前景, 2011 年10 月13 日 (PDF){rel=\"external\" type=\"application/pdf\"}\n- 経済が不確実な時代に対応する：アジアの見通し; アヌープ・シン; iMF direct ブログ 2011年10月13日掲載\n  - 経済が不確実な時代に対応する：アジアの見通し; アヌープ・シン; iMF direct ブログ 2011年10月13日掲載 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 経済が不確実な時代に対応する：アジアの見通し; アヌープ・シン; iMF direct ブログ 2011年10月13日掲載 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- dangerous new phase\n- IMF’s Managing Director stated recently\n- Regional Economic Outlook for Asia and the Pacific\n- rebalancing growth\n\nSource: https://www.imf.org/en/blogs/articles/2011/10/13/dealing-with-uncertain-economic-times-the-outlook-for-asia"
    }
  ],
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    "[Markdown version](/en/blogs/articles/2011/10/13/dealing-with-uncertain-economic-times-the-outlook-for-asia/index.md)",
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    "Authors: Anoop Singh",
    "Published: October 13, 2011",
    "Author: Anoop Singh",
    "Date: October 13, 2011",
    "Key premise: Recent large equity sell-offs across Asia and safe haven flows into Japan illustrate the region’s vulnerabilities to further global shocks.",
    "Exact quoted assessment from the IMF’s Managing Director: “what makes the situation all the more urgent is that it has implications for every country.”",
    "The region’s fundamentals—built up over the past decade—remain relatively strong.",
    "Economic uncertainties in Europe and the United States pose large downside risks.",
    "Recent market behavior: large equity sell-offs across Asia and safe haven flows into Japan.",
    "View from Tokyo is described as “more serene than the view from other advanced country capitals, but there are storm clouds on the horizon.”",
    "Domestic demand in Asia has been rather resilient, in contrast to most advanced countries.",
    "Factories are working at near full capacity and unemployment is low.",
    "Overheating is the main concern in a number of economies, with credit growing strongly and inflation remaining stubbornly high.",
    "Growth in Asia is slowing, mainly due to weakening external demand.",
    "Policy challenge summarized: contend with softening exports, which act as a drag on growth, even as they seek to contain inflation and asset bubbles.",
    "Channels through which euro zone turmoil could affect Asia:",
    "Potential consequence: impairment of dollar liquidity provision in Asian markets where European banks have been important providers.",
    "Recommended stance: policymakers should react flexibly to domestic challenges amid an unsettled external environment.",
    "Specific guidance:",
    "Comparative advantage noted: Asia’s fundamentals are good, and the scope for policy adjustments is much greater than in other regions of the world.",
    "Asian low-income and Pacific Island economies face similar challenges, but often in a more acute form.",
    "In low-income countries, the fight against inflation is complicated by strong second-round effects and less well anchored inflation expectations.",
    "Pacific Island economies need to undertake further structural reforms to lift their potential growth.",
    "Weak global demand highlights the benefit for Asia to rebalance growth towards domestic sources of demand.",
    "Rebalancing is acknowledged as a long-term process, but efforts should start immediately.",
    "Fiscal policy advice: re-prioritizing fiscal spending and directing public spending toward critical infrastructure investments.",
    "Platform: IMFBlog, described as a forum for the views of IMF staff and officials on pressing economic and policy issues.",
    "Organizational note: The IMF, based in Washington D.C., is an organization of 191 countries, working to foster global monetary cooperation and financial stability around the world.",
    "Disclaimer: The views expressed are those of the author(s) and do not necessarily represent the views of the IMF and its Executive Board.",
    "**iMFdirect 博客: 应对不确定的经济时期, 亚洲的前景, 2011 年10 月13 日**",
    "**経済が不確実な時代に対応する：アジアの見通し; アヌープ・シン; iMF direct ブログ 2011年10月13日掲載**",
    "[dangerous new phase](http://blogs.imf.org/2011/09/20/strong-policy-action-the-essence-of-restoring-global-economic-hope/)",
    "[IMF’s Managing Director stated recently](http://blogs.imf.org/2011/09/27/resolve-and-determination-how-we-get-out-of-this-together-2/)",
    "[Regional Economic Outlook for Asia and the Pacific](http://www.imf.org/external/pubs/ft/reo/2011/apd/eng/areo1011.htm)",
    "[rebalancing growth](http://blogs.imf.org/2011/04/29/rebalancing-growth-in-asia/)"
  ],
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