Asia's lead in the global recovery, but must be vigilant and cautious on inflation and "hot money" caused the flow of foreign capital, the International Monetary Fund (IMF) warned it was Thursday.
IMF's latest economic review for the Asia-Pacific said, growth will moderate in 2011 in countries with advanced economies, but remain "particularly strong" in China, India and Indonesia.
It also says that "the appreciation and greater flexibility of exchange rates" seems indeed necessary in order to fortify a variety of countries against the risk of hot money flowing in the form of large capital flows, the report said.
Yuan low allegedly made by the Chinese become the main target of complaint or protest from the United States and Europe, which said Beijing gets an unfair trade advantage by making its exports cheaper.
Global currency war is expected to be the main agenda at the meeting of finance ministers and central bank governors who are members of the Group of 20 (G20) in South Korea this weekend.
A draft communique issued before the meeting promised "exchange rate system that much more determined by the market", which shows the expression often used in the U.S. and intended to urge countries to refrain from intervention in the financial markets.
The IMF called on Asia to increase investment in infrastructure to encourage private sector investment and sustain domestic demand that will be key to long-term growth in the region.
International Institute said, exports will slow from the very high level in 2009 and early 2010, which at least help narrow down some of the international trade gap that had raised fears of protectionism and currency wars.
Asia's current account surplus will shrink to around 3.0% of GDP in 2010 and 2011, from about 5.0% in 2007, which would "act moderately towards minimizing global imbalances," the IMF said.
But added: "The decline is relatively limited in the projected surplus over the medium term will play a role in making the high global inequality."
Strong economic expansion and signs of increasing inflation in Asia showed that the area was already "reached the threshold limit to normalize the establishment of a policy in their environment."
"Many economies have started taking steps in that direction," the IMF said, two days after Beijing announced a rate hike for the first time in three years.
Other Asian countries such as India, Singapore and Thailand also have raised their lending rates recently in order to curb rising consumer prices. China's consumer prices had reached levels fastest pace in almost two years last September, official data showed.
Tightening monetary policy and other measures will also help reduce the risk of heating when foreign capital, who expect profits better than that obtained in Europe and USA, flows into the region, says IMF
"Capital flows are sustainable will also pose a risk to financial stability if it integrates with the financial condition domesik easily available to excess," the IMF report said.
source: http://www.analisadaily.com
IMF's latest economic review for the Asia-Pacific said, growth will moderate in 2011 in countries with advanced economies, but remain "particularly strong" in China, India and Indonesia.
It also says that "the appreciation and greater flexibility of exchange rates" seems indeed necessary in order to fortify a variety of countries against the risk of hot money flowing in the form of large capital flows, the report said.
Yuan low allegedly made by the Chinese become the main target of complaint or protest from the United States and Europe, which said Beijing gets an unfair trade advantage by making its exports cheaper.
Global currency war is expected to be the main agenda at the meeting of finance ministers and central bank governors who are members of the Group of 20 (G20) in South Korea this weekend.
A draft communique issued before the meeting promised "exchange rate system that much more determined by the market", which shows the expression often used in the U.S. and intended to urge countries to refrain from intervention in the financial markets.
The IMF called on Asia to increase investment in infrastructure to encourage private sector investment and sustain domestic demand that will be key to long-term growth in the region.
International Institute said, exports will slow from the very high level in 2009 and early 2010, which at least help narrow down some of the international trade gap that had raised fears of protectionism and currency wars.
Asia's current account surplus will shrink to around 3.0% of GDP in 2010 and 2011, from about 5.0% in 2007, which would "act moderately towards minimizing global imbalances," the IMF said.
But added: "The decline is relatively limited in the projected surplus over the medium term will play a role in making the high global inequality."
Strong economic expansion and signs of increasing inflation in Asia showed that the area was already "reached the threshold limit to normalize the establishment of a policy in their environment."
"Many economies have started taking steps in that direction," the IMF said, two days after Beijing announced a rate hike for the first time in three years.
Other Asian countries such as India, Singapore and Thailand also have raised their lending rates recently in order to curb rising consumer prices. China's consumer prices had reached levels fastest pace in almost two years last September, official data showed.
Tightening monetary policy and other measures will also help reduce the risk of heating when foreign capital, who expect profits better than that obtained in Europe and USA, flows into the region, says IMF
"Capital flows are sustainable will also pose a risk to financial stability if it integrates with the financial condition domesik easily available to excess," the IMF report said.
source: http://www.analisadaily.com
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