July 21,2010
Strauss-Kahn challenges Asia to change economic habits
That warm glow and soft purring emanating from South Korea was the International Monetary Fund (IMF) trying, yet again, to put the Asian financial crisis behind it.
IMF needs Asia on its side. As the fastest growing part of the world economy, the region will wield more clout at global institutions such as IMF and provide more of their funding.
The problem, to put it bluntly, is that Asia does not need IMF or like IMF, whose invasive policy prescriptions are blamed in the region for having exacerbated the 1997-98 meltdown.
Hence, the charm offensive by the fund’s managing director, Dominique Strauss-Kahn, at a big conference in the central South Korean city of Daejon last week.
“Let me be candid: we have made some mistakes,” he said. “We have learned the importance of focusing on essential policies, and of protecting the most vulnerable, when tackling a crisis.”
Declaring that he wanted Asian countries to see IMF as a second home, Strauss-Kahn added: “Asia’s time has come in the global economy, and so it must be at IMF.”
But there was an implicit quid pro quo. In return for a bigger role, Asia had to take more responsibility for reducing global imbalances. Governments had to nurture a “second engine of growth”—domestic demand—instead of relying so much on exports now that Europe and the US face years of belt-tightening.
In a nutshell, Strauss-Kahn seemed to be saying, IMF is ready to change. Is Asia? “The decisions made now will impact Asia’s performance for decades to come,” the IMF chief said.
Asia faces the challenge of high savings rate. The lagging business environment and underdeveloped financial sectors are also holding up its economic transformation. Strauss-Kahn knows all this, of course. But the meeting was an opportunity to accentuate the positive. “Rapid growth has turned the region into a global economic powerhouse—and Asia’s economic weight in the world is on track to grow even larger,” he said. REUTERS
Strauss-Kahn challenges Asia to change economic habits
That warm glow and soft purring emanating from South Korea was the International Monetary Fund (IMF) trying, yet again, to put the Asian financial crisis behind it.
IMF needs Asia on its side. As the fastest growing part of the world economy, the region will wield more clout at global institutions such as IMF and provide more of their funding.
The problem, to put it bluntly, is that Asia does not need IMF or like IMF, whose invasive policy prescriptions are blamed in the region for having exacerbated the 1997-98 meltdown.
Hence, the charm offensive by the fund’s managing director, Dominique Strauss-Kahn, at a big conference in the central South Korean city of Daejon last week.
“Let me be candid: we have made some mistakes,” he said. “We have learned the importance of focusing on essential policies, and of protecting the most vulnerable, when tackling a crisis.”
Declaring that he wanted Asian countries to see IMF as a second home, Strauss-Kahn added: “Asia’s time has come in the global economy, and so it must be at IMF.”
But there was an implicit quid pro quo. In return for a bigger role, Asia had to take more responsibility for reducing global imbalances. Governments had to nurture a “second engine of growth”—domestic demand—instead of relying so much on exports now that Europe and the US face years of belt-tightening.
In a nutshell, Strauss-Kahn seemed to be saying, IMF is ready to change. Is Asia? “The decisions made now will impact Asia’s performance for decades to come,” the IMF chief said.
Asia faces the challenge of high savings rate. The lagging business environment and underdeveloped financial sectors are also holding up its economic transformation. Strauss-Kahn knows all this, of course. But the meeting was an opportunity to accentuate the positive. “Rapid growth has turned the region into a global economic powerhouse—and Asia’s economic weight in the world is on track to grow even larger,” he said. REUTERS