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Asia must brace for possible economic shocks: IMF chief

Asian policemakers must brace for possible further shocks given risks to the global economy such as the eurozone turmoil, the International Monetary Fund chief said today.

business Updated: Jul 12, 2010 11:39 IST

Asian policemakers must brace for possible further shocks given risks to the global economy such as the eurozone turmoil, the International Monetary Fund chief said on Monday.

The continent also faces policy challenges such as managing the sharp rebound in capital inflows, and risks related to overheating and credit and asset bubbles, IMF managing director Dominique Strauss-Kahn said in a speech.

Strauss-Kahn said that because Europe and the United States are expected to face a possibly extended period of lower growth, Asia must increase its domestic investment and consumption as a long-term policy issue.

"Asia has emerged as a global economic powerhouse no one can doubt that Asia's economic performance will continue to grow in importance," 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," he said in a speech to a two-day conference in the central South Korean city of Daejeon.

Strauss-Kahn said macroeconomic, financial and corporate sector reforms put in place over the last decade had played an important role in the region's resilience.

"So, despite being hit hard initially, Asia was able to bounce back quickly from the global financial crisis," he told the conference on Asia's leading role in the global economy.