The International Monetary Fund (IMF) has said that the economic growth in the Asia and Pacific region is expected to slow down in 2022 and 2023.
The IMF said this in a report released on Friday.
According to them, this reflects headwinds from several aspects, including global financial tightening and the Russia-Ukraine conflict, according to the report.
The IMF said Asia’s strong economic rebound was losing momentum early this year, with a weaker-than-expected second quarter.
Furthermore, they said that It cut growth forecasts for Asia and the Pacific to four per cent in 2022 and 4.3 per cent in 2023, down by 0.9 and 0.8 percentage points, respectively, compared to the April forecasts.
The levels in April’s outlook were well below the 5.5 per cent average over the last two decades.
The Director of the IMF’s Asia and Pacific Department, Krishna Srinivasan, believed that Asia will remain a relative bright spot in an increasingly dimming global economy.
According to the report, the United States (U.S.) Federal Reserve had become much more aggressive in tightening its monetary policy.
The U.S. inflation remained stubbornly high, saying that this had translated into tighter financial conditions for Asia.
It said that almost all countries in Asia had seen a deterioration of their terms of trade, and this had been an important factor behind currency depreciation so far this year.
The Director said that for policymakers, further tightening of monetary policy would be required to ensure that inflation returns to target and inflation expectations remain well anchored.
Also, he suggested that fiscal consolidation was needed to stabilise public debt and support the monetary policy stance.
Discussion about this post