Asia’s growth is forecast to be 5.4 percent in 2019 and 2020, accounting for more than 60% of global growth, according to the International Monetary Fund.
“Despite the faster than expected slowdown of global economy, the outlook for Asia Pacific region remains relatively stable. The region continues to account for more than 60% of the global growth, but downside risks have increased, including faster than expected deceleration in global growth and trade, the possibility of the renewed trade tension, higher oil prices, and global financial market volatility. Therefore, it is still too early to say that spring has come in the region.,” said Changyong Rhee, Director of the Asia and Pacific Department of the IMF in a briefing on Friday on the Asia and Pacific regional Outlook.
The IMF urged countries in the region to pursue policies and reforms to support the expansion and promote sustainability and resilience. Trade uncertainties remain, but the IMF is hopeful the U.S. and China will resolve their differences. Rhee outlined a few important factors of any deal.
“Few things will be important. I think that probably the confirmation that the tariff will not increase or even better to reduced. Okay? And then this agreement should be not a short-term agreement, then it gives us some kind of confidence to market. It can be a more fundamental agreement between the China and the U.S. and others. Basically, that means that the structural issues that have been discussed such as fair trade, the intellectual property, and the structure side or more market opening. Those things have to be an important element that otherwise, this agreement may be short lived. So, a kind of longer-lasting agreement will be very important,” he said.
And the IMF said growth-friendly fiscal consolidation needed to address Japan’s high debt, especially given its aging population.
“Beyond the short run, a growth friendly fiscal consolidation strategy would be needed in Japan and this has to increase, has to include further increases and gradual increases in the consumption tax and to levels that are about 10 percent. And then combined with concrete measures to deal with the spending implications of the aging population. Announcing the finding and announcing such a plan now can build fiscal space even in the short run,” said Odd Per Brekk, Deputy Director of the Asia and Pacific Department.
You can watch the video of the full news conference at IMF.org