La­garde urges Asia to take big­ger role guid­ing global econ­omy

The Pak Banker - - FRONT PAGE -

NEW DELHI: Asia needs to take a lead­er­ship role in the global econ­omy that re­flects the con­ti­nent's grow­ing clout, In­ter­na­tional Mon­e­tary Fund Man­ag­ing Di­rec­tor Chris­tine La­garde said. Asian of­fi­cials should keep mon­e­tary pol­icy sup­port­ive, while us­ing fis­cal pol­icy to boost growth and macro-pru­den­tial mea­sures to pro­tect fi­nan­cial sta­bil­ity, La­garde said in a speech late Satur­day in New Delhi. Adopt­ing struc­tural re­forms to boost com­pet­i­tive­ness, growth and jobs will be key, she said.

La­garde, who was reap­pointed last month for a se­cond fiveyear term, called Asia the "world's most dy­namic re­gion," not­ing it ac­counts for 40 per­cent of the world econ­omy and will de­liver nearly two-thirds of global growth over the next four years.

"Asia now af­fects the world more than ever be­fore," La­garde said, ac­cord­ing to the text of her re­marks. "By the same to­ken, Asia is now more deeply af­fected by global eco­nomic de­vel­op­ments than ever be­fore -- and must re­spond to them."

La­garde, 60, said Asia's rapid in­te­gra­tion was one of the most strik­ing global de­vel­op­ments of the past gen­er­a­tion. Many coun­tries in the con­ti­nent pulled off eco­nomic "mir­a­cles," and sev­eral be­came world pow­er­houses, she said.

Still, pol­icy mak­ers need to step up their re­sponse to a range of global chal­lenges, in­clud­ing volatile mar­kets and cap­i­tal flows, fi­nan­cial tight­en­ing and low com­mod­ity prices, she said. In a speech this week in Wash­ing­ton, the IMF's No. 2 of­fi­cial, David Lip­ton, warned that global growth is weak­en­ing, and called on the world to re­vive the "spirit of ac­tion" that fol­lowed the 2008 fi­nan­cial cri­sis.

La­garde urged the fol­low­ing mea­sures in spe­cific coun­tries: China should im­prove the "al­lo­ca­tion of credit to help re­bal­ance the econ­omy away from debt-led in­vest­ment." Ja­pan should re­form its la­bor mar­kets and cor­po­rate gov­er­nance, and dereg­u­late its prod­uct mar­kets. In­dia, which is at a "cru­cial mo­ment in its his­tory," needs to im­prove the ef­fi­ciency of its prod­uct mar­kets, en­cour­age pri­vate in­vest­ment and boost in­fra­struc­ture. De­spite Asia's growth, in­come in­equal­ity has in­creased in 15 of 22 Asian economies since 1990, La­garde said.

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