Against the backdrop of the emergence of Asia as a global economic powerhouse that now face potential challenges from the increasing capital inflows, Dominique Strauss-Kahn - the managing director of the International Monetary Fund (IMF) – said on Monday that Asian policymakers should be prepared for possible economic shocks, in the wake of risks to the global economy, like the eurozone turmoil.
During the course of his prepared speech at a two-day conference in the central South Korean city of Daejeon, Strauss-Kahn said: “As Asia's economic weight in the world continues to rise, its stake in the economic performance of other countries is rising too.”
Talking of some key policy challenges that the Asian countries face, Strauss-Kahn said that the countries need to know not only how best to manage the sharp rebound in capital inflows, but also the associated risks of overheating, credit, and asset bubbles.
Strauss-Kahn also added that Asia has, thus far, depended heavily on exports; and should now boost domestic investment and consumption – more so because the US and Europe are likely to face a possibly extended period of lower growth.
About Asia’s leading role in the global economy, the IMF chief said that the Asian region was able to bounce back quickly from the global downturn – in spite of being hit hard initially - largely because the macroeconomic, financial and corporate sector reforms the region had put in place over the last decade.