UN to Asia: Keep fiscal stimulus packages active
By Alex Kennedy |
May 7, 2010, Friday
|
Print Edition
Print Edition
ASIAN governments should retain stimulus packages to help spur economic growth, even at the risk of higher inflation, the United Nations said yesterday.
"The overwhelming priority for policy makers should be to continue stimulating economies until the self-perpetuating motors of growth are firmly entrenched," the UN said in an annual fiscal survey of the area.
"In the balance of risks, Asian and Pacific economies should aim to sustain growth ratherthan manage inflation."
It said premature withdrawal of stimulus spending could have severe consequences for the region's growth and for its poorest people.
Gross domestic product in developing Asia - the region's 37 countries excluding Japan, Australia and New Zealand - would likely grow 7 percent this year, up from 4 percent last year, as export demand rebounded, the UN said.
Despite expected growth of 9.5 percent this year in China and 8.3 percent in India, the UN said the region's recovery was fragile and policy makers should be vigilant.
The UN also urged the region's policy makers to coordinate monetary policies to avoid spikes in capital inflows to countries where interest rates are higher.
"The recovery cannot be said to have been reignited in full measure as yet," the UN said. "Growth still depends largely on government spending and investment from stimulus policies."
"The overwhelming priority for policy makers should be to continue stimulating economies until the self-perpetuating motors of growth are firmly entrenched," the UN said in an annual fiscal survey of the area.
"In the balance of risks, Asian and Pacific economies should aim to sustain growth ratherthan manage inflation."
It said premature withdrawal of stimulus spending could have severe consequences for the region's growth and for its poorest people.
Gross domestic product in developing Asia - the region's 37 countries excluding Japan, Australia and New Zealand - would likely grow 7 percent this year, up from 4 percent last year, as export demand rebounded, the UN said.
Despite expected growth of 9.5 percent this year in China and 8.3 percent in India, the UN said the region's recovery was fragile and policy makers should be vigilant.
The UN also urged the region's policy makers to coordinate monetary policies to avoid spikes in capital inflows to countries where interest rates are higher.
"The recovery cannot be said to have been reignited in full measure as yet," the UN said. "Growth still depends largely on government spending and investment from stimulus policies."
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