12 Oct 2012

TOKYO / MIDDLE EAST-ASIA

Growth inAsiaduring the first half of this year has slowed to its lowest rate since the start of the global financial crisis, and only a modest and gradual pick up is expected next year, the IMF said. And, the International Monetary Fund offered a mixed outlook for theMiddle Eastregion. IMF

Posted at: October 12, 2012 11:51 am

Duration: 02:19

Available in: SD

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TOKYO / MIDDLE EAST-ASIA
TRT: 2.19
SOURCE: IMF
RESTRICTIONS: NONE
LANGUAGE: ENGLISH / NATS

DATELINE: 12 OCTOBER 2012, TOKYO, JAPAN

SHOTLIST:

1. Wide shot, Asia and Pacific Department briefing
2. Med shot, officials at briefing
3. Tilt up, from notes to reporter
4. SOUNDBITE (English) Anoop Singh, Director of the Asia and Pacific Department, IMF:
"Growth in Asia has slowed, but Asia remains a growth leader, expanding by over two percentage points faster than the world average. Second, obviously as we know, there are clear downside risks. But, our sense is most economies in Asia still have room for a strong policy response were these downside risks to materialize."
5. Med shot, journalists
6. SOUNDBITE (English) Anoop Singh, Director of the Asia and Pacific Department, IMF:
"The best insurance against external risks especially if for a protracted period of slow growth in the advanced economies is to build domestic sources of growth. And, that rebalancing of policies remains the policy priority for much of Asia."
7. Tilt down, from Annual Meetings symbol to Director of the Middle East and Central Asia Department Masood Ahmed
8. SOUNDBITE (English) Masood Ahmed, Director of the Middle East and Central Asia Department, IMF:
"The main issues that face these countries for the medium term are how to create more jobs for their nationals, many of them have young and growing populations, particularly jobs in the private sector rather than in the public sector; how to diversify their economies; and also how to build more space in terms of their budgets."
9. Med shot, reporters
10. SOUNDBITE (English) Masood Ahmed, Director of the Middle East and Central Asia Department, IMF:
"Our objective would be, when we go and look at the program, to make sure, together, with our interlocutors in the Egyptian authorities, that the policies and measures that are being proposed will in fact achieve the objective of trying to reduce the deficit, but do it in a way that does not adversely affect vulnerable households and poorer people, and that does not have a negative impact on growth."
11. Med shot, photographer and journalists
12. Wide shot, end of briefing

STORYLINE:

Growth in Asia during the first half of this year has slowed to its lowest rate since the start of the global financial crisis, and only a modest and gradual pick up is expected next year, the IMF said. And, the International Monetary Fund offered a mixed outlook for the Middle East region.

"Growth in Asia has slowed, but Asia remains a growth leader, expanding by over two percentage points faster than the world average. Second, obviously as we know, there are clear downside risks. But, our sense is most economies in Asia still have room for a strong policy response were these downside risks to materialize," said Anoop Singh, head of the IMF's Asia and Pacific Department, at a press briefing held during the Annual Meetings of the IMF and the World Bank in Tokyo, Japan.

Singh pointed to a slowdown in export to Europe and the United States as a key factor in slowing Asian economies.

Domestic factors have also contributed to the slowdown in the region, Singh said. These include policies to engineer a soft landing in China, a drop in investment adding to supply constraints in India, and some loss of consumption momentum in Japan.

According to the Regional Economic Outlook Update for the region, issued on October 12 in Tokyo, GDP growth across Asia is forecast to average 5½ percent in 2012, from 6 percent in 2011. Going forward, growth is expected to pick up gradually to about 6 percent in 2013, helped by resilient domestic demand, easy financing conditions, and the slow expected improvement in external demand from advanced economies.

But the outlook is subject to considerable risks. The key near-term risks are mainly external—a further escalation of the euro area crisis and failure to address the U.S. fiscal cliff.

Near-term risks from within the region appear comparatively smaller. For example, a hard landing in China stemming from a sharp correction in the real estate market constitutes an important downside risk for Asia, but Singh explained that this is currently a remote possibility.

Singh pointed out that the main near-term challenge for policymakers is to support noninflationary growth and maintain financial stability, while guarding against downside risks.

On the monetary side, Singh added that the accommodative stances adopted by central banks around the region are broadly appropriate because they help provide some measure of insurance against downside risks to growth.
On the fiscal front, Singh said that higher structural deficits than before the crisis imply a need to rebuild fiscal space in many Asian economies.

Looking ahead, Singh said that the best form of insurance against external risk remains strengthening domestic sources of growth.

"The best insurance against external risks especially if for a protracted period of slow growth in the advanced economies is to build domestic sources of growth. And, that rebalancing of policies remains the policy priority for much of Asia," he said.

Singh suggested further reforms on multiple fronts to avoid sustained growth slowdowns in the region, such as reorienting government budgets toward investments in social safety nets and critical infrastructure, reforming goods and labor markets, or adjusting to demographic change by boosting labor force participation.

Turning to the Middle East and North Africa, the IMF reported most oil-producing countries are doing "quite well in terms of growth." The IMF expects the economies of such countries to grow at a rate of about 6.5%.

"The main issues that face these countries for the medium term are how to create more jobs for their nationals, many of them have young and growing populations, particularly jobs in the private sector rather than in the public sector; how to diversify their economies; and also how to build more space in terms of their budgets," said Masood Ahmed, Director of the IMF's Middle East and Central Asia Department.

He noted that oil producing nations have boosted spending even faster than the price of oil has risen. Ahmed added that the break-even price at which their budgets are "has become quite high in some cases."

Ahmed also noted that an IMF team will visit Egypt by the end of the month to discuss a $4.8 billion loan that the country has requested. Ahmed said Egypt needs to build broad support for any plan.

"Our objective would be, when we go and look at the program, to make sure, together, with our interlocutors in the Egyptian authorities, that the policies and measures that are being proposed will in fact achieve the objective of trying to reduce the deficit, but do it in a way that does not adversely affect vulnerable households and poorer people, and that does not have a negative impact on growth," said Ahmed.