{
  "title": "The Art of Shifting Gear",
  "publication": "IMF Blog, April 27, 2012",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2012/04/27/the-art-of-shifting-gear",
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  "summary": "Author: Anoop Singh",
  "sections": [
    {
      "heading": "Capital inflows",
      "content": "- Author: Anoop Singh  \n- Date: April 27, 2012\n- Key observations:\n  - Asia’s economy remains heavily dependent on events outside its borders; the notion of a full “decoupling” is a fallacy.\n  - Two illustrative scenarios highlight interconnectedness:\n    - Improved global prospects—following concerted policy actions in the euro area and indications of recovery in the United States—would benefit trade-dependent Asia via a boost in demand, fresh capital inflows, and potential revival of overheating pressures.\n    - Escalation and global spread of financial turmoil in the euro area would likely cause a sharp fall in demand for Asia’s exports by advanced economies and a possible retrenchment of credit by stressed foreign banks, severely affecting Asia.\n  - Geopolitical shocks that push energy prices sharply higher would force difficult trade-offs between inflationary pressures and budgetary risks from energy and food subsidies.\n- Recent developments (as of early 2012):\n  - “If the first months of 2012 are anything to go by, then the outlook is favorable.”\n  - Capital inflows into emerging Asia rebounded.\n  - Stock markets recovered.\n  - Most local currencies appreciated against the U.S. dollar.\n  - Inflation continued to fall, propelled mainly by the normalization of energy and food prices.\n  - Inflation expectations have increased in many countries, while macroeconomic policies remain generally accommodative in the region."
    },
    {
      "heading": "Global developments",
      "content": "- Policy implications:\n  - Asia’s policy choices will be largely determined by the direction of global developments.\n  - Under a positive global scenario with improving economic and financial conditions and rising inflation risks, policymakers should consider renewed tightening and continued normalization of monetary policy to pursue sustainable, noninflationary growth.\n  - It is “too early to declare victory over the forces of financial volatility and contagion.” The art for policymakers is to be prepared to shift gears if, and when, circumstances warrant."
    },
    {
      "heading": "Differing by country",
      "content": "- Medium-term priorities vary across countries:\n  - China:\n    - Needs to continue rebalancing away from investment-led toward consumption-led growth.\n    - Continued rebalancing would be beneficial for China and for the world.\n    - Contextual note: at the IMF-World Bank Spring Meetings, the Vice-Governor of the People’s Bank of China, Yi Gang, remarked that strolling through shopping malls shows consumption in action.\n  - India:\n    - Would benefit from improvements in the investment climate and raising its trade integration.\n  - ASEAN economies:\n    - Public investment in infrastructure—within the framework of medium-term goals—would help attract private investment and promote more broad-based growth.\n  - Low-income countries in Asia:\n    - Tasked with attracting foreign direct investment (including from other Asian economies) to become part of the Asian growth dynamic.\n- Strategic rationale:\n  - Rebalancing would make the region less vulnerable to external shocks.\n  - Despite interdependence, Asia “continues to have plenty of space and the power to determine the shape of its economies.”\n\nThe Art of Shifting Gear — IMF blog post by Anoop Singh, April 27, 2012\n\n---\n\n\n References\n\n- Asia and Pacific Regional Economic Outlook\n- report\n\nSource: https://www.imf.org/en/blogs/articles/2012/04/27/the-art-of-shifting-gear"
    }
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    "Authors: Anoop Singh",
    "Published: April 27, 2012",
    "Author: Anoop Singh",
    "Date: April 27, 2012",
    "Key observations:",
    "Recent developments (as of early 2012):",
    "Policy implications:",
    "Medium-term priorities vary across countries:",
    "Strategic rationale:",
    "[Asia and Pacific Regional Economic Outlook](http://www.imf.org/external/pubs/ft/reo/2012/APD/eng/areo0412.htm)",
    "[report](http://www.imf.org/external/pubs/ft/survey/so/2012/CAR042712A.htm)"
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