International Monetary Fund IMF warns risks to Asian economy will increase

The International Monetary Fund (IMF) warned that the Asian economy will face many risks due to trade tensions and China's slow growth.

Risks to Asia's economy have increased due to escalating trade tensions, difficulties in China's real estate sector and the possibility of further market volatility, the International Monetary Fund (IMF) said.

According to the IMF, persistent downward pressure in China could cause trade tensions by affecting industries with similar export structures in neighboring countries. The IMF also called on Beijing to implement economic recovery measures based on increased consumer demand.

"A longer-than-expected recession in China would harm both the regional and global economies ," the IMF said in its Asia economic outlook report.

An unfinished apartment project of China Evergrande Group in Hebei province (China). Photo: Reuters

" China's policy response is important in this context ," the IMF said, calling for measures to support real estate sector adjustment and boost private consumption.

In its latest forecast, the IMF expects Asia's economy to grow 4.6% in 2024 and 4.4% in 2025, with loose monetary policy globally expected to boost private demand next year.

The IMF's forecasts for 2024 and 2025 were both revised up by 0.1 percentage points from the April forecast, but are still lower than the 5.0% growth rate for 2023.

Risks could be negative for the economy as monetary tightening and geopolitical tensions could dampen global demand, increase trade costs and cause market volatility, the IMF said.

“A serious risk is an escalation in retaliatory tariffs among major trading partners,” which would exacerbate trade fragmentation and hurt growth in the region, the IMF said.

While low growth, high debt and escalating wars were officially on the agenda at the annual meetings of the International Monetary Fund and World Bank last week, finance leaders were more concerned about the potential impact if Donald Trump returns to power in the US presidential election on November 5.

Analysts say Mr Trump has pledged to impose a 10% tariff on imports from all countries and a 60% tariff on imports from China, which would have a major impact on supply chains around the world.

“ Tariffs, non-tariff barriers and local content rules are not the right solution, as they distort trade and investment flows and undermine the multilateral trading system, ” Krishna Srinivasan, director of the IMF’s Asia and Pacific Department, said at a recent press conference.

“ Ultimately, such measures will result in consumers and investors paying higher prices ,” he said.

The IMF said recent market volatility could be a harbinger of future volatility, as investors price in expectations of more rate cuts from the US Federal Reserve and gradual rate hikes from the Bank of Japan.

“Sudden changes in expectations about these policies could cause sharp adjustments in exchange rates, with spillover effects to other segments of financial markets ,” the report said.

The IMF expects China’s economy to grow 4.8% in 2024, up 0.2 point from its April forecast but still slower than last year’s 5.2% expansion. Growth is expected to slow further to 4.5% in 2025, the IMF said.

Source: https://congthuong.vn/quy-tien-te-quoc-te-imf-canh-bao-rui-ro-doi-voi-nen-kinh-te-chau-a-se-gia-tang-356565.html