Tuesday, July 13, 2010

Asia should nurture domestic demand for sustainable growth, says IMF chief

DAEJEON (South Korea): Asia needs to nurture its domestic demand as its export-driven growth remains vulnerable to overseas shocks, Yonhap News Agency reported the head of the International Monetary Fund (IMF) as saying Tuesday, July 13.

"Given that some of Asia's major trading partners ' in particular Europe and the US ' are entering a period of lower growth rates, the need to nurture Asia's domestic demand over the medium term has become even more crucial," IMF managing director Dominique Strauss-Kahn told a press meeting held after wrapping up a two-day conference here.

His emphasis on domestic demand is in line with discussions during the conference, during which many experts and regional policymakers underscored the importance of nurturing a "second engine of growth" that can reduce the region's heavy dependence on exports for growth.

The importance of boosting domestic consumption and investment has gained more significance, especially after the global economy was quickly hurled into a recession in the wake of the financial crisis that started in late 2008.

The crisis hit export-driven countries harder than others, raising the need to further nurture domestic demand to brace for a future worldwide economic slump, Yonhap reported.

Concluding his discussions during the conference co-hosted by the IMF and South Korea, Strauss-Kahn said that Asia showed "remarkable resilience" in surviving the global crisis, emerging as a global economic powerhouse.

He attributed the region's "extensive" reforms undertaken over the past decade since the 1997-98 financial turbulence that helped many of its nations avoid the full brunt of the crisis this time.

The IMF chief took notice of Asia's "increasingly important" role in global economic policymaking, saying that its weight will continue to grow in the global economy.

With regard to the IMF's role, Strauss-Kahn said that the Washington-based organisation will step up efforts to improve the effectiveness of its policy advice and provide better service to a "broader" range of people in Asia.

"We will strive for an even-handed approach to surveillance, which will enhance the effectiveness of the IMF's policy advice. We will serve a broader Asian audience through increased outreach activities," he said.

He added that the IMF will work "closely" with Asian countries to strengthen the global financial safety net, an agenda that is being pushed by South Korea within the framework of the Group of 20 meetings.

The IMF will also help Asia play a bigger role in the global economy, citing an ongoing move to increase its voting power in the organisation, he said. ' Bernama

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