Domestic financial systems have developed, cross-border financial flows within the region are growing apace as demand from governments and large firms increases and as the capabilities of financial institutions develop, and governments have initiated regional cooperation aimed at preventing future crises and managing them if they occur. In many Asian economies, some fiscal consolidation could also rebuild the space needed to respond to future shocks and preempt potential overheating pressures from capital inflows. Growth decelerated to 1¼ percent in 2012 before picking up sharply in the first half of 2013. Author : International Monetary Fund. The economy has experienced seven consecutive years of robust growth, buoyed by high commodity prices, foreign direct investment and expansion of private sector credit.
In each volume, recent economic developments and prospects for the region are discussed as a whole, as well as for specific countries. Suggested Citation Corrections All material on this site has been provided by the respective publishers and authors. The social safety net is being strengthened in the context of a rapidly aging population. But there are also risks, particularly for regional banks if fiscal and growth reforms disappoint and credit demand stays subdued. Growth should stay strong over the next few years at 8—10 percent buoyed by gaming exports and investment, with inflation remaining around 5—5½ percent. Singapore continues to implement a strong set of macroeconomic and financial sector policies. ?? However, the economy has slowed down markedly since mid-2012, and unemployment remains high at 15 percent.
Rising equity values stimulated consumption, and exports rebounded supported by strong regional demand and a weaker yen. The economy has expanded at a pace above potential the last five consecutive quarters, and unemployment has fallen to record low levels. Some Directors urged the authorities to phase out—in a manner that preserves financial stability—the measures assessed by staff as capital flow management measures. The studies show that closer financial integration, involving more open financial markets, with well-chosen partners, would be welfare-improving and should reduce the need for the counter-productive, self-insurance policies that result in foreign exchange accumulation. These increased risks make it a priority to raise actual and potential growth. This reflects shifts in G3 U. The team met with senior officials from the government, the Bank of Japan BoJ , and private sector representatives, to discuss recent economic developments and the policy agenda going forward.
And in advanced economies as well as emerging and developing economies there is a general, urgent need for structural reforms to strengthen growth potential or make growth more sustainable. The Fund has issued a number of documents relating to the consultations. Directors urged the authorities to continue a constructive dialogue with staff on these issues. As a very open economy, Singapore is particularly exposed to external risks related to a protracted period of slower growth in advanced and emerging economies, a continued buildup and eventual unwinding of excess capacity in China, an abrupt surge in financial market volatility as investors reassess underlying risks, and geopolitical risks. In turn, this could reduce the sensitivity of bank balance sheets to interest rate shocks and allow them to extend more credit at home and abroad and raise profitability. As a result, East Asia remains the fastest growing region in the world, despite a slowdown from the average growth rate of 8. Please ask Hassan Zaidi to update the entry or the correct email address.
The buoyant property market could also correct if demand fundamentals shift or interest rates rise abruptly with the withdrawal of unconventional monetary policy abroad. Haruhiko Kuroda, who once served as a vice minister of finance for international affairs at the Ministry of Finance, has already taken this into account. . Over time, a successful package of reforms would have positive economic spillovers. For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jim Beardow or Hassan Zaidi The email address of this maintainer does not seem to be valid anymore.
In other words, the global financial market and the world economy can only be ensured if some other country steps up and continues to supply money to the global market. Over the longer term, the focus in most countries must be on structural reforms to enhance export competitiveness. The economy has expanded at a pace above potential the last five consecutive quarters, and unemployment has fallen to record low levels. The Japanese premier, who was briefly prime minister from 2006-2007, has been continuously in office since late 2012. So long as monetary easing pursues domestic goals, and is accompanied by comprehensive fiscal and structural reforms, we do not see the yen's recent depreciation as problematic. Higher growth in Japan and easier global financial conditions would more than offset the effect of exchange rate appreciation and generate positive spillovers. While growth will likely remain above potential in 2018, inflationary pressures appear contained, and risks to the outlook are balanced.
Such transactions cause fluctuations on the global financial market. In China, the authorities need to strike a balance between containing growing risks from rising leverage and meeting the indicative growth targets. This will prompt households to review their spending, as they heavily rely on deposits. Going forward, Directors emphasized the importance of supporting economic growth while maintaining stability, as well as raising productivity through structural reform. They encouraged further progress on the fiscal structural agenda, including efforts to strengthen fiscal transparency and risk management. Productivity growth may also be muted unless the country undertakes reforms of its labour market. While headline consumer price inflation went up to 3.
The size of the estimate will affect the global market. The reform agenda should prioritize structural measures aimed at facilitating reflation particularly labor market reforms to boost wages , followed by policies to lift potential growth. The policy stance is appropriate, with scope for further tightening of macroprudential policies should property prices continue to rise sharply. Strengthening capital standards of domestic banks and encouraging stronger risk-management should be considered. The Fed is to continue reducing its monthly bond buying before ending its zero-rate policy next year, and historically, turbulence hits the global financial market whenever a monetary spigot closes.
If downside risks materialize, targeted fiscal stimulus should be used to buttress growth. Growth in the first quarter of 2013 rebounded strongly, led by consumption and net exports, and growth is projected to reach 1. They also highlight areas in which policy reforms are recommended. In China, growth will ease slightly, to 7. The near-term outlook, key risks, and their related policy challenges are analyzed throughout the reports, and current issues are explored, such as when and how to withdraw public interventions in financial systems globally while maintaining a still-fragile economic recovery. Directors agreed with the planned pace of fiscal consolidation in 2018, noting that it will help build buffers while maintaining financial market confidence.
Short-term fiscal stimulus and rising global demand have been key drivers. Also, further relaxing entry requirements for high-skilled foreign workers could strengthen labor supply in areas where there are shortages. For example, when the consumption tax increase from 8% to 10% comes into effect in April 2017, the government should be ready to take measures to offset the drag on growth that are likely to result. Middle East and Central Asia Dept. It also allows you to accept potential citations to this item that we are uncertain about. General contact details of provider:. Successful implementation would not only benefit Japan, but also strengthen growth and stability of the global economy.