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Asia's role as engine for global economic growth challenged
Source: Xinhua |
September 14, 2012, Friday
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Print Edition
THE slowdown in exports and capital flow volatility are challenging Asia's role as the engine room for world economic growth, International Monetary Fund Deputy Managing Director Zhu Min said yesterday.
The Asian economy remains strong compared with the rest of the world, with better fundamentals than during its financial crisis in 1998, Zhu told a panel discussion during the 2012 Summer Davos Forum held in Tianjin.
However, the region is being challenged by the impact of the global slowdown on its exports and increasingly the volatile flow of capital in and out of it, he said.
The IMF forecast Asia's annual growth rate to fall to 5.5 percent this year from 5.9 percent in 2011 and 8.5 percent in 2010, Zhu said.
Meanwhile, foreign capital has moved in and out of Asia frequently, adding to risks of market instability.
Foreign capital fled from Asia during the global financial crisis in 2008 and 2009, returned to the region in 2010 but exited once more in 2011 and is now back to Asia again, Zhu said. He cited an increase of foreign capital's share in the Malaysian bond market to 30-35 percent from 5-10 percent.
"Can Asia continue to lead global growth? That's the challenge and we really need to look into it," he said.
Though Asia can maintain that leading position, it faces challenges. These include seeking more sustainable growth, moving up the value chain of manufacturing and tapping its service industry potential, Zhu said, noting that the most important aspect is manufacturing.
As the global manufacturing base, Asian countries are forming a huge vertical integrated supply chain in the region but it needs to be more efficient, better financed and prepared against risks, he said.
Zhu also called for setting up a regional bond market to meet capital demand in Asia.
The three-day forum, known as the World Economic Forum Annual Meeting of the New Champions, started on Tuesday.
The Asian economy remains strong compared with the rest of the world, with better fundamentals than during its financial crisis in 1998, Zhu told a panel discussion during the 2012 Summer Davos Forum held in Tianjin.
However, the region is being challenged by the impact of the global slowdown on its exports and increasingly the volatile flow of capital in and out of it, he said.
The IMF forecast Asia's annual growth rate to fall to 5.5 percent this year from 5.9 percent in 2011 and 8.5 percent in 2010, Zhu said.
Meanwhile, foreign capital has moved in and out of Asia frequently, adding to risks of market instability.
Foreign capital fled from Asia during the global financial crisis in 2008 and 2009, returned to the region in 2010 but exited once more in 2011 and is now back to Asia again, Zhu said. He cited an increase of foreign capital's share in the Malaysian bond market to 30-35 percent from 5-10 percent.
"Can Asia continue to lead global growth? That's the challenge and we really need to look into it," he said.
Though Asia can maintain that leading position, it faces challenges. These include seeking more sustainable growth, moving up the value chain of manufacturing and tapping its service industry potential, Zhu said, noting that the most important aspect is manufacturing.
As the global manufacturing base, Asian countries are forming a huge vertical integrated supply chain in the region but it needs to be more efficient, better financed and prepared against risks, he said.
Zhu also called for setting up a regional bond market to meet capital demand in Asia.
The three-day forum, known as the World Economic Forum Annual Meeting of the New Champions, started on Tuesday.
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