Asia clearly the powerhouse of global economy, says IMF official
WASHINGTON: Asia, which is contributing 60 percent to global growth, is clearly the powerhouse of the global economy, said Krishna Srinivasan, director of the International Monetary Fund (IMF)’s Asia and Pacific Department.
Global Supply Chains
“This is the most dynamic region of the world. It has a huge amount of labor force. A lot of that is also skilled labor force. It’s a region which is highly integrated in global supply chains. And lastly, it’s a region which has seen huge increase in productivity growth,” Srinivasan told Xinhua in an interview earlier this week.
“For these three reasons, this region is contributing a lot more than other regions,” he said. In its latest World Economic Outlook (WEO) report released on Tuesday, the IMF maintained its global growth forecast in 2024 at 3.2pc, consistent with its projection in July. Emerging and developing Asia, meanwhile, is expected to grow 5.3pc.
“Emerging markets in Asia are pulling their weight much more than advanced economies,” as advanced economies are still seeing interest rate tightening and weak domestic demand, Srinivasan said.
Geo-economic Fragmentation
The IMF official noted that going forward, the region also will have to confront the risks of geo-economic fragmentation, impact of artificial intelligence (AI), impact of climate change and so on. The impact of geo-economic fragmentation on Asia is particularly concerning, he said.
According to IMF estimation, there were roughly 1,000 trade-restrictive measures in 2019, but in 2023, the number had surged to 3,000. “A lot of trade-distorting measures are happening, which is leading to greater fragmentation,” Srinivasan said.
“In a region like Asia, which has benefited the most from regional integration and integration of supply chains, any kind of fragmentation means that Asia risks losing the most,” he continued.
Redistribution
The IMF official noted that there is redistribution of trade — for example, Association of Southeast Asian Nations (ASEAN) economies have benefited in some targeted sectors because of the US-China trade war.
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