Inflation and capital inflows are two challenges that threaten Asia ’seconomic growth in 2011, according to one of the IMF’s leadingeconomists.
In a recent interview with the InternationalMonetary Fund (IMF) survey online, looking at prospects for the world’sfastest growing region, the head of the IMF’s Asia and PacificDepartment, Anoop Singh, warned that the strength of Asia ’s growthcould lead to the threat of inflation.
The region is exposed tothe risks of weaker global economic growth and financial spilloversfrom advanced economies in the region, Singh said.
He suggested capital inflows needed to be managed by exchange rate flexibility and macroprudential measures.
In particular, Asian nations need to build an economic framework toensure capital inflows can create momentum for investment, along withbroader coordination for financial stability and governments need tocarefully handle the timing of withdrawal from economic stimulusprogrammes.
However, the IMF official predicted the region’seconomic importance in promoting the global economic recovery wouldcontinue to increase in 2011. Clear-sighted policies, together withpromoting exports and domestic consumption – which helped boost theregion’s strong economic recovery last year – will continue this year,he said./.