ID :
133723
Tue, 07/20/2010 - 13:42
Auther :
Shortlink :
https://oananews.org//node/133723
The shortlink copeid
ADB SAYS TIME FOR EAST ASIA TO UNWIND STIMULUS POLICY
KUALA LUMPUR, July 20 (Bernama) -- The Asian Development Bank (ADB) says the strong economic recovery in emerging East Asia means it is time to unwind monetary and fiscal policy stimulus across the region.
In South Korea, Malaysia, Singapore, Taiwan, China and Thailand, tightening
has already begun, and should continue at what appears to be an appropriate
pace, ADB said in the July edition of its Asia Economic Monitor released
Tuesday.
With a few exceptions, ADB said it is now time for the region to unwind
policy stimulus.
In terms of policy mix, a strategy of normalising monetary policy first and
consolidating fiscal policy subsequently is more appropriate for most of
emerging East Asia.
Considering the need to rebalance the region's sources of growth, it said
there is merit in normalising monetary conditions through a mix of currency
appreciation and interest rate adjustments rather than entirely through policy
rate hikes.
The pace at which economies unwind stimulus should depend on the speed of
recovery as well as evolving risks, the Manila-based ADB said.
"It's critical for each country to withdraw the stimulus at an appropriate
pace but greater regional coordination, especially on exchange rates, could spur
regional demand and help global economic rebalancing," said Srinivasa Madhur,
Senior Director of ADB's Office of Regional Economic Integration, which
published the Asia Economic Monitor.
ADB has upgraded its 2010 growth forecast for the 14 economies of emerging
East Asia to an aggregate 8.1 per cent from the 7.7 per cent projected in its
Asian Development Outlook 2010 published in April.
The forecast for the region's economic growth in 2011 remains at 7.2 per
cent.
"While most emerging East Asian economies are assured of a sharp V-shaped
recovery this year, it is too early to say that the 'V' stands for victory.
"Ensuring the sustainability of the recovery depends heavily on the correct
timing, policy mix and pace at which economic stimulus is withdrawn. The
private sector must be strong enough to take over," he said.
The AEM points to three major risks to the positive outlook for emerging
East Asia: a disruption in the recovery in advanced economies; destabilising
capital flows and unintended policy errors while unwinding the stimulus
measures.
-- BERNAMA
In South Korea, Malaysia, Singapore, Taiwan, China and Thailand, tightening
has already begun, and should continue at what appears to be an appropriate
pace, ADB said in the July edition of its Asia Economic Monitor released
Tuesday.
With a few exceptions, ADB said it is now time for the region to unwind
policy stimulus.
In terms of policy mix, a strategy of normalising monetary policy first and
consolidating fiscal policy subsequently is more appropriate for most of
emerging East Asia.
Considering the need to rebalance the region's sources of growth, it said
there is merit in normalising monetary conditions through a mix of currency
appreciation and interest rate adjustments rather than entirely through policy
rate hikes.
The pace at which economies unwind stimulus should depend on the speed of
recovery as well as evolving risks, the Manila-based ADB said.
"It's critical for each country to withdraw the stimulus at an appropriate
pace but greater regional coordination, especially on exchange rates, could spur
regional demand and help global economic rebalancing," said Srinivasa Madhur,
Senior Director of ADB's Office of Regional Economic Integration, which
published the Asia Economic Monitor.
ADB has upgraded its 2010 growth forecast for the 14 economies of emerging
East Asia to an aggregate 8.1 per cent from the 7.7 per cent projected in its
Asian Development Outlook 2010 published in April.
The forecast for the region's economic growth in 2011 remains at 7.2 per
cent.
"While most emerging East Asian economies are assured of a sharp V-shaped
recovery this year, it is too early to say that the 'V' stands for victory.
"Ensuring the sustainability of the recovery depends heavily on the correct
timing, policy mix and pace at which economic stimulus is withdrawn. The
private sector must be strong enough to take over," he said.
The AEM points to three major risks to the positive outlook for emerging
East Asia: a disruption in the recovery in advanced economies; destabilising
capital flows and unintended policy errors while unwinding the stimulus
measures.
-- BERNAMA
