21st Century Business Herald reporter Xiang Xiufang reported in Washington On October 13, local time, Sanjaya Panth, deputy director of the Asia-Pacific Department of the International Monetary Fund (IMF), said in response to reporters' questions at the press conference of the Asia-Pacific Economic Outlook Report that the signing of the " Regional Comprehensive Economic Partnership Agreement " (RCEP) is an important progress, indicating that there is still a willingness to further integrate within Asia. It has the potential to promote trade, investment and growth, and is a very welcome progress.
As Asia's strong economic rebound momentum was weaker than expected in the second quarter, the second quarter was weaker than expected. IMF has lowered its growth forecasts for the Asia-Pacific region this year and next year to 4% and 4.3%, respectively, far below the 5.5% average over the past 20 years. Still, Asia remains a relatively bright spot in the increasingly bleak global economy.
(On October 13 local time, the IMF held a press conference on the Asia-Pacific economic outlook report, with Sanjaya Panth on the right, source: IMF)
IMF pointed out that driven by factors such as global food and energy prices, currency declines against the US dollar, and narrowing output gaps, the inflation rate of most Asian economies now exceeds the target of central bank . Core inflation, excluding volatile food and energy prices, also rose, and its sustainability—driven by inflation expectations and wages—must be closely monitored.
At the same time, the US dollar strengthened against most major currencies as Fed raises interest rates and suggests further hikes in the future. Most Asian emerging market currencies depreciate 5% to 10% against the US dollar this year, while the yen depreciates by more than 20%. These recent depreciations have begun to pass on to the core inflation throughout the region, which may keep inflation for longer than previously expected.
Amid slowing growth, the IMF notes that policy makers need to respond strongly to complex challenges. Central Bank needs to adhere to austerity policies until inflation continues to fall to its target. Exchange rate adjustments should be allowed to reflect fundamentals. But if global shocks lead to soaring lending rates that are not related to changes in domestic policy, threatening financial stability or undermining the ability of central banks to stabilize inflation expectations, foreign exchange intervention could become a useful part of the policy mix. Countries should also urgently consider improving their liquidity buffers.
Amid increasing downward pressure on the global economy, the IMF believes that strong international cooperation is needed to prevent greater geo-economic divisions and ensure that trade helps growth. In addition, structural changes are urgently needed to increase the region’s production potential and respond to the climate crisis.
Although the global supply chain is more fragmented due to the geopolitical conflict, in Asia, the Regional Comprehensive Economic Partnership Agreement (RCEP) has come into effect and is committed to promoting the regional economic integration .
How do you view the prospects of regional economic integration in Asia? Sanjaya Panth told reporters that over time, inter-regional trade in Asia has grown very significantly, and now accounts for more than half of Asia's total trade. Asia is a typical example of how trade can become an engine of growth and improve the living standards of hundreds of millions of people.
Sanjaya Panth expressed concern about the risks of global supply chain fragmentation and its uncertainty, and the trade momentum could reverse and the benefits of trade could decline. He believes that in this context, the signing of RCEP is an important progress, indicating that there is still a willingness to further integrate within Asia. It has the potential to promote trade, investment and growth. So, this is a very welcome development. But at the same time, he believes that it remains important for all countries to continue their efforts to seek multilateral solutions, including through WTO .
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