Global economic growth weakening, Asia remains resilient, says IMF director

International Monetary Fund (IMF) Asia Pacific Director Dr Changyong Rhee and Chairman of GIOAS International Advisory Board Tan Sri Andrew Sheng at the Regional Economic Outlook for Asia Talk, January 24, 2019. — Picture by Sayuti Zainudin
International Monetary Fund (IMF) Asia Pacific Director Dr Changyong Rhee and Chairman of GIOAS International Advisory Board Tan Sri Andrew Sheng at the Regional Economic Outlook for Asia Talk, January 24, 2019. — Picture by Sayuti Zainudin

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GEORGE TOWN, Jan 24 – Global economic growth projections are weakening with the World Economic Outlook (WEO) forecasts seeing a downward revision in 2019 and 2020.

International Monetary Fund Asia and Pacific Department director Changyong Rhee revealed in a talk titled “Economic Outlook for Asia” here that global economic growth is slowing down more than expected when it started weakening in October.

“The global WEO forecast of 3.5 per cent for 2019 as compared to 3.7 per cent is a good number but this is not reflected by financial market sentiments which are much worse,” he said.

He said financial market sentiments are slowing down due to worries on downside risks related to trade policy uncertainties.

The downside risks included the US-China trade tensions, financial market volatility, Brexit-related uncertainty, political risks, bank-sovereign doom loops, deeper than envisaged slowdown in China and less policy space compared to 2007.

Rhee said many of those downside risks are mostly due to political issues instead of to the economy such as the US-China trade tensions and the Brexit-related uncertainty.

He said there is no way to predict whether the US-China trade dispute would be resolved by the end of February.

He said it could worsen if ongoing discussions between the two countries were to fall through and this may have repercussions to countries unprepared for it.

The additional tariffs by US on China, if imposed, would have a significant impact most countries, Rhee said.

He added that if any of the downside risks were to happen, the global economy can have a serious downturn.

Rhee said some countries may not have the fiscal strength to face such an eventuality.

However, Rhee noted that Asia will remain resilient amid the global weakening growth.

“Many Asian countries maintained a resilient growth rate as many Asian economies are in better shape now,” he said.

He also gave the assurance that the 1997 Asian financial crisis will not repeat itself as he believe Asian countries are now better prepared to stave off a crash.

As these downside risks are due to political issues, he said policy makers has a hand in ensuring global economic stability by making careful decisions such as in the US-China trade dispute.

“If policy makers make a mistake, we will have a big problem,” he said.

He said policy makers need to be more reasonable in making decisions on any policy.

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