BAGAC, Bataan—An International Monetary Fund (IMF) executive on Thursday said global growth should remain moderate, with uneven prospects across many countries and regions, although he noted a changing recovery trend for advanced economies.
The IMF forecasts global growth at 3.5 percent this year, and 3.8 percent next year, the fund’s head for Asia and the Pacific, Odd Per Brekk, said.
Brekk, however, noted the IMF sees the growth outlook for advanced economies as improving, while that for emerging market and developing countries as slowing down.
“This reflects bigger prospects for some large emerging markets, including oil-exporting emerging market countries. And, that said, emerging markets, and especially in the Asian region, remain the global growth leaders,” he said.
Brekk considered lower oil prices as a positive factor but indicated there are risks related to financial-sector development, especially with the diverging policies of the world’s major central banks, specifically the US Federal Reserve, the European Central Bank and the Bank of Japan. He cautioned that these diverging policies could lead to disruptions in financial markets that could, in turn, spill over to other countries.
In terms of policy requirements for this kind of environment in advanced economies, Brekk said raising actual and potential growth continue to be the highest priority, combined with demand and structural reforms.
Emerging markets and developing countries also have an important structural reform agenda to raise potential output, he said, adding that in general, they have limited policy space to support demand.
He noted that Asia’s economic outlook remains favorable, and the region is projected to continue to be a global growth leader.
“We’re expecting growth in Asia and the Pacific to be 5.5 percent roughly, 5.5 percent this year and next year, and with domestic demand being the main driver. Although there is again considerable variance across countries in this region,” he said.
“So, what we’ve been discussing here today and we continue to discuss tomorrow is… what policies can help secure growth in the short run and in the long run?”
For the Asia-Pacific Economic Cooperation (Apec) region, the main priority would be to bolster actual and potential growth; and to strengthen the resilience and build policy space, he said.
With this in mind, the IMF thinks monetary policies could be flexible across countries, he said, adding that it needs to respond flexibly because the situation is uncertain.
Other thrusts should include allowing interest rates to become flexible, he said, calling on countries to focus on strong micro- and macroprudential supervision and regulation, fiscal policy and structural reforms. Brekk said the Apec meetings are discussing the four policy areas contained in the Cebu Action Plan. –Philippines News Agency
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