{
  "title": "IMF Survey: Asia in 2012: Resilient, but at Risk from Euro Downturn",
  "publication": "IMF News, January 5, 2012",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/socar010412a",
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  "summary": "Events unfolding far from Asia's shores could shape the region's economic outlook for 2012. But if the global economic situation deteriorates, Asia's policy makers still have the room to respond aggressively, say IMF economists.",
  "authors": [
    "Shekhar Shankar Aiyar IMF Asia",
    "Pacific Department January"
  ],
  "publishDate": "2012-01-05",
  "sections": [
    {
      "heading": "Outlook for 2012",
      "content": "- Events unfolding in the euro zone could shape Asia’s economic outlook for 2012; a deterioration in the global economic situation—most notably in the troubled economies of the euro zone—would have significant spillovers for Asia.\n- Asia has so far been resilient: strong domestic demand, low unemployment, and factories working at near-full capacity.\n- Credit growth has slowed from the torrid pace of early 2011 but remains robust in most economies.\n- Japan is mounting a recovery from the March 2011 earthquake and tsunami; Thailand is undergoing reconstruction after the country’s devastating floods.\n- Asia’s heavy reliance on trade makes 2012 likely to be a difficult year; external demand will be crucial for regional performance.\n- Regional growth has started to slow due to weaker external demand and domestic factors such as tighter macroeconomic policy stances, especially in India and China.\n- IMF economists expect only relatively soft demand for exports from Asia going forward.\n- Recent stresses in several regional financial markets indicate financial channels of contagion pose risks:\n  - Global aversion to risk has caused a sharp decline in Asian stock markets.\n  - Regional currencies have depreciated.\n  - Dollar funding pressures are increasing in several economies.\n  - The cost of insurance on several regional banks has soared to levels only previously seen in the aftermath of the Lehman Brothers bankruptcy.\n- Euro zone turmoil would likely reduce access to credit in Asia because euro zone banks are an important source of funding and trade credit."
    },
    {
      "heading": "Responding to a deteriorating outlook",
      "content": "- Asian policymakers have room to react aggressively if risks materialize; there is still ample policy space in the region, though less than at the outset of the global financial crisis in some countries.\n- Some economies have already started monetary easing.\n- Fiscal policy consolidation could be appropriately delayed if external demand were to collapse, especially where low levels of public debt afford space for measures.\n- Additional policy options (examples drawn from the 2008 global crisis response) include:\n  - Liquidity guarantees for certain banking systems to maintain critical flows of credit.\n  - Programs to facilitate trade credit and lending to small and medium-sized enterprises.\n  - Strengthening and activation of central bank swap lines and regional reserve pooling arrangements to address shortages in particular currencies.\n  - Drawing down large accumulated foreign exchange reserves in a crisis to smooth the impact on economic activity."
    },
    {
      "heading": "Looking at the medium term",
      "content": "- Asia remains home to some of the world’s most dynamic economies, but several reforms are needed to sustain historical performance and reduce vulnerabilities to external shocks. Challenges vary across countries:\n  - China: Actions needed for sustained rebalancing away from investment and exports toward private consumption, including reform and liberalization of the financial system, fiscal support to household consumption, and a further expansion of the social safety net.\n  - Japan: Key challenges are lowering public debt and raising potential growth; measures include raising labor force participation, boosting the activity of small and medium-sized businesses, and deregulating the service sector.\n  - Korea: Target productivity gains in the service sector.\n  - Many ASEAN countries: Focus on infrastructure investment to boost potential growth.\n- Structural reforms are needed to make growth more inclusive; despite notable progress in reducing poverty, income inequality has increased in most of Asia over the last two decades."
    },
    {
      "heading": "Asia and the IMF: The road to Tokyo Annual Meetings",
      "content": "- The 2012 IMF-World Bank Annual Meetings will be held in Tokyo, reflecting Asia’s critical role as a bulwark of stability in the world economy and the IMF’s growing partnership with the region.\n- Asia’s links with the IMF are being strengthened through governance reforms that give the region a greater voice in the institution and through selection of key IMF personnel from the region.\n- Recent appointments cited include:\n  - Tharman Shanmugaratnam, Singapore’s Minister for Finance, as Chairman of the International Monetary and Financial Committee.\n  - Min Zhu as Deputy Managing Director of the Fund.\n\nIMF Survey by Shekhar Shankar Aiyar, Asia and Pacific Department — January 5, 2012\n\n---\n\n Content in this bundle\n\n- Car010412acpdf (PDF){rel=\"external\" type=\"application/pdf\"}\n- Car010412ajpdf (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- https://www.imf.org/en/News/country-focus\n- PRESS CENTER\n- IMF Country Focus\n- IMF Chief in Asia\n- Asia’s economic outlook\n- Strong demand in Indonesia\n- India: The Road Ahead\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/socar010412a"
    }
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    "Authors: Shekhar Shankar Aiyar IMF Asia, Pacific Department January",
    "Published: January 5, 2012",
    "Events unfolding in the euro zone could shape Asia’s economic outlook for 2012; a deterioration in the global economic situation—most notably in the troubled economies of the euro zone—would have significant spillovers for Asia.",
    "Asia has so far been resilient: strong domestic demand, low unemployment, and factories working at near-full capacity.",
    "Credit growth has slowed from the torrid pace of early 2011 but remains robust in most economies.",
    "Japan is mounting a recovery from the March 2011 earthquake and tsunami; Thailand is undergoing reconstruction after the country’s devastating floods.",
    "Asia’s heavy reliance on trade makes 2012 likely to be a difficult year; external demand will be crucial for regional performance.",
    "Regional growth has started to slow due to weaker external demand and domestic factors such as tighter macroeconomic policy stances, especially in India and China.",
    "IMF economists expect only relatively soft demand for exports from Asia going forward.",
    "Recent stresses in several regional financial markets indicate financial channels of contagion pose risks:",
    "Euro zone turmoil would likely reduce access to credit in Asia because euro zone banks are an important source of funding and trade credit.",
    "Asian policymakers have room to react aggressively if risks materialize; there is still ample policy space in the region, though less than at the outset of the global financial crisis in some countries.",
    "Some economies have already started monetary easing.",
    "Fiscal policy consolidation could be appropriately delayed if external demand were to collapse, especially where low levels of public debt afford space for measures.",
    "Additional policy options (examples drawn from the 2008 global crisis response) include:",
    "Asia remains home to some of the world’s most dynamic economies, but several reforms are needed to sustain historical performance and reduce vulnerabilities to external shocks. Challenges vary across countries:",
    "Structural reforms are needed to make growth more inclusive; despite notable progress in reducing poverty, income inequality has increased in most of Asia over the last two decades.",
    "The 2012 IMF-World Bank Annual Meetings will be held in Tokyo, reflecting Asia’s critical role as a bulwark of stability in the world economy and the IMF’s growing partnership with the region.",
    "Asia’s links with the IMF are being strengthened through governance reforms that give the region a greater voice in the institution and through selection of key IMF personnel from the region.",
    "Recent appointments cited include:",
    "[Car010412acpdf (PDF)](/-/media/websites/imf/imported/external/chinese/pubs/ft/survey/so/2012/car010412acpdf.pdf){rel=\"external\" type=\"application/pdf\"}",
    "[Car010412ajpdf (PDF)](/-/media/websites/imf/imported/external/japanese/pubs/ft/survey/so/2012/car010412ajpdf.pdf){rel=\"external\" type=\"application/pdf\"}",
    "[https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[IMF Country Focus](https://www.imf.org/en/news/country-focus)",
    "[IMF Chief in Asia](https://www.imf.org/external/pubs/ft/survey/so/2011/CAR111111A.htm)",
    "[Asia’s economic outlook](https://www.imf.org/external/pubs/ft/reo/2011/apd/eng/areo1011.htm)",
    "[Strong demand in Indonesia](https://www.imf.org/external/pubs/ft/survey/so/2011/INT102111A.htm)",
    "[India: The Road Ahead](https://www.imf.org/external/mmedia/view.aspx?vid=704923044001)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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