Asia’s Next Growth Frontier
IMF News, March 5, 2025
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Bibliographic details
- Published: March 5, 2025
Event details and context
- Opening Remarks by the IMF Managing Director Kristalina Georgieva at a conference on Asia and the IMF: Resilience through Cooperation, Tokyo, Japan, March 5, 9AM (JST)
- (As Prepared for Delivery)
- Publication date: March 4, 2025
- IMF Communications Department — PRESS OFFICER: Phone: +1 202 623-7100 Email: MEDIA@IMF.org
Key themes from the remarks
- Historical transformation
- Japan’s post–World War II investments in infrastructure and manufacturing, and sweeping reforms, set the country on a path to becoming an economic powerhouse.
- Asia now contributes over 60 percent of global growth.
- Regional diversity and openness
- Asia comprises advanced economies, emerging and frontier markets, and small island states, with varying demographics and income levels.
- Openness and deepening economic ties have been crucial to countries’ success.
- Global shifts affecting the region
- Many countries face weaker growth prospects and are saddled with high public debt.
- The COVID-19 pandemic and recent geopolitical developments have emphasized the importance of security of supplies.
- Trade is no longer the engine of global growth it used to be.
- Massive transformations are underway, including rapid advances in AI and changing patterns of capital flows and trade.
- Policy recalibrations
- Governments worldwide are shifting priorities; the new US administration is reshaping policies on trade, taxation, public spending, deregulation, and digital assets.
The future of growth — three opportunities
- Services-led growth
- Services have already drawn about half of the region’s workers, up from just 22 percent in 1990.
- IMF research cited: Asia’s labor productivity in financial services is four times higher than in manufacturing, and twice as high in business services.
- Digitalization and AI
- Demand for digital products and services in the region has accelerated quickly and is on track to continue growing faster than the region’s GDP.
- Japan’s Rakuten, China’s Alibaba Group, and Indonesia’s GoTo Group now rival e-commerce giants Amazon and Walmart.
- In AI development, Japan and China are racing ahead, followed closely by South Korea and Singapore.
- In Singapore, an estimated 40 percent of jobs could be made more productive by AI.
- Several digital economy agreements are in place in the region, enabling digital companies to connect and share data more easily.
- Greater regional cooperation and trade
- Over the past four decades, intra-regional trade in Asia has increased by 43 percent.
- Today, more than half of Asian trade is regional.
- FDI from Asian countries to Japan has nearly doubled over the past decade, driven by market opportunities in Japan’s technology sector.
Policy implications and IMF engagement
- Conditions to harness opportunities
- The shift toward services, digitalization and AI, and greater regional integration can lift growth, but the region must navigate domestic developments and global changes carefully.
- IMF’s role and activities
- The IMF aims to be a trusted partner, providing country-specific advice, safeguarding global stability, and offering financing and capacity development.
- The Fund has evolved from managing fixed exchange rates in the 1970s to active surveillance and systematic coverage of spillovers.
- Recent adjustments include changed thinking on capital flow management and foreign exchange interventions, and an upgraded lending toolkit with more flexible instruments for emerging market economies.
- With Japan’s support, the IMF is offering more support to low-income countries, especially in capacity development, and expanding presence via regional technical assistance centers.
- Areas for further discussion and action
- How the IMF can best support members, especially the most vulnerable, to grow and build economic resilience.
- How to tailor more IMF advice to support countries’ efforts to deepen regional collaboration, including strategic engagement with groups like the ASEAN, the Pacific Island countries, and medium sized and larger economies.
- How to strengthen the global financial safety net, including assessing how IMF facilities can be further improved and working closely with regional arrangements to enhance crisis prevention and response capabilities.
- Commitment to reform and partnership
- Reforms are difficult but can steer countries toward stronger and durable growth and a more stable and prosperous global economy.
- The IMF, led by Managing Director Kristalina Georgieva and Deputy Managing Director Nigel Clarke, is committed to being part of this journey and to ongoing engagement and dialogue.
Source: Opening Remarks by the IMF Managing Director Kristalina Georgieva, March 4, 2025.