Investing in a Rebalancing of Growth in Asia


By Anoop Singh

Continuing my travels through Asia for the launch of our October 2010 Regional Economic Outlook: Asia and Pacific, I am writing to you today from Singapore. In my last post, I focused on the near-term outlook and challenges for Asia. Today, I turn to the key medium-term challenge—the need to rebalance economies in the region away from heavy reliance on exports by strengthening domestic sources of growth. This is against a backdrop of the need to rebalance global growth that was emphasized over the weekend by the ministers of the Group of Twenty industrialized and emerging market countries.

Heavy reliance, arguably over-reliance, on exports is a common challenge across Asia. Yet, the policies to address it will differ among the countries in the region. Much of the public discussion focuses on ways to increase consumption, and this is something the IMF has written about extensively in the past. But the role of investment in rebalancing growth is equally important and something that should not be overlooked. Continue reading

Asia: The Challenge of Capital Inflows


By Anoop Singh

As I have highlighted in previous posts, Asia has been leading the global recovery and it is expected to continue doing so in the near term.

Not only has Asia’s rapid growth helped output return to pre-crisis levels relatively quickly, it has attracted large capital inflows into the region. Foreign capital has poured in, attracted by Asia’s strong fundamentals and bright growth prospects. Portfolio and cross border banking flows have rebounded sharply as financial conditions normalized.

Looking ahead, our growth projections suggest that Asia is expected to outperform advanced countries. As a result, the region is likely to continue to attract significant capital inflows, assuming that fallout from the euro zone sovereign debt crisis is contained and that the recent spike in global risk aversion abates.

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