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The June issue of the IMF's publication F&D
- - Finance & Development - - has the theme "Asia Leading the Way," which explores how the region is moving into a
leadership role in the world economy.
The issue looks at Asia's biggest
economy, China, which has relied heavily on exports to grow, and its need to
increase domestic demand and to promote global integration if it is to continue
to thrive. China is not the only Asian economy that heavily depends on exports
and all of them might take some cues from the region's second-biggest economy,
India, which has a highly developed services sector.
Min Zhu, the new Special Advisor to the IMF's
Managing Director, talks about Asia in the global economy, the global financial
crisis, correcting imbalances, and the IMF in Asia. And "People in Economics"
profiles an Asian crusader for corporate governance, Korea's Jang Hasung. This
issue of F&D also covers how best to reform central banking in the aftermath of
the global economic crisis; the pernicious effects of derivatives trading on
municipal government finances in Europe and the United States; and some ominous
news for governments hoping to rely on better times to help them reduce their
Mohamed El-Erian, CEO of trillion-dollar bond
fund PIMCO and a former member of the Fund's staff, argues that sovereign wealth
funds are well-placed to navigate the new global economy that will emerge
following the world wide recession. "Back to Basics" explains supply and
demand. "Data Spotlight" explores the continuing weakness in bank credit.
And "Picture This" focuses on the high, and growing, cost of energy
Anoop Singh, Director of the IMF’s Asia and Pacific Department,
writes that based on expected trends, within five years Asia’s economy
(including Australia and New Zealand) will be about 50 per cent larger than it
is today (in purchasing-power-parity terms), account for more than a third of
global output, and be comparable in size to the economies of the United States
and Europe. By 2030, Asian gross domestic product (GDP) will exceed that of the
Group of Seven major industrial economies (G-7) (see Charts 1 and 2 below).
Singh says at least two notable
features mark the ongoing global recovery from Asia’s
perspective. First, unlike in previous global recessions, Asia
is making a stronger contribution to the global recovery than
any other region. Second, also in contrast to previous episodes,
recovery in many Asian countries is being driven by two
engines - - exports and strong domestic demand. Strong domestic
demand reflects in part policy stimulus, but resilient private
demand is also a factor. All this adds up to an impression that
Asia is changing in key ways and that these changes have
implications for the rest of the world.
The economist says that although
there are still near-term risks in the outlook, in many ways,
Asia is emerging from the recession with its standing in the
world strengthened. The risks include Asia’s (and other
regions’) vulnerability to renewed negative shocks to global
growth and financial markets. Nonetheless, the possibility that
Asia could become the world’s largest economic region by 2030 is
not idle speculation. It seems very plausible, based on what
Asia has already achieved in recent decades: emerging Asia’s
share of world trade has doubled and of world GDP tripled in
just the past two decades. In addition, the strengthened policy
frameworks and institutions Asia has developed, particularly
over the past decade, stood up well during the recession and
provide a strong foundation for the future. Furthermore, in many
countries in the region, populations are relatively young and
will contribute to burgeoning workforces.
Stephen Bird, CEO for Asia
Pacific at Citi, says if China wants to be a domestically driven economy, there
needs to be higher wages for employees. He speaks to CNBC's Martin Soong, Karen
Tso and Sri Jegarajah about China's missing middle class:
While Asia has made unprecedented progress in
poverty reduction in recent decades, with China alone having pulled some several
hundred million people out of poverty since the launch of its reforms in 1978.
Nonetheless, a high proportion of the world’s poor still live in Asia, and 17
per cent of people in the east Asian and Pacific countries - - 40 percent in
south Asia (India, Pakistan, Bangladesh, Sri Lanka) - - live on less than $1.25
a day. Moreover, the financial crisis has slowed poverty reduction in the
region. The World Bank estimates 14 million more people in Asia will be living
in poverty in 2010 as a result of the crisis.
chances of a double-dip, with 'Dr. Doom' Nouriel Roubini, RGEMonitor.com and NYU
Stern School of Business professor: