It may be too early for central banks to start detailing strategies to unwind unprecedented policies to boost the economy, Mexican Central Bank Governor Guillermo Ortiz said on Saturday. In an interview on the sidelines of the annual meeting of central bank governors at the Bank for International Settlements (BIS), he said the global economic downturn was past its worst but recovery is not yet secured.
“It may be premature to go into a lot of details about exit strategies at this point, it’s important to have that subject in mind but I think that we are not out of the woods yet,” said Ortiz, who is also chairman of the BIS board.
“One important question is whether these green shoots actually take root and the incipient recovery which we see in some parts of the world is sustainable,” he said.
Central bankers from around the world are gathering this weekend at the BIS headquarters in Switzerland, where hot topics include the improving outlook and the need for the authorities to unwind huge support for the economy and the financial system.
Ortiz said safety nets for the financial sector could not be permanent, urging active dialogue among G20 countries on their removal.
“This will be a central thing at the G20, to try to if not coordinate, at least be very much in contact on the rollback of safety nets ... and also extraordinary measures to support the financial system,” he said.
Central banks, for their part, had to be careful on the timing of their exit from a period of low interest rates and generous liquidity supply.
“Eventually they will have to be rolled back, it’s important not to do it prematurely but also not to take too long — the question of timing is of the essence,” he said.
A pick-up in commodity prices had eased the risk of deflation in all but a few developed countries, but was also threatening to tie the hands of emerging market central banks because of its implication on inflation.
“What is worrying is that the rising commodity prices may put some emerging markets again in a situation where the degree of freedom in terms of monetary policy is constrained,” he said.
Ortiz said though the collapse in economic growth was synchronized globally, the recovery appeared to be uneven with emerging markets picking up more quickly.
In many emerging economies, an improvement was already showing up in the second quarter but final demand remained weak in the US, Europe and Japan.
“The performance of emerging markets, particularly in Asia, has been stronger than anticipated and that is also true in some emerging markets in Latin America,” he said.
“In my view the recovery in the world economy will only be sustainable if final demand — consumption, investment and so on — can be sustained in the major economies. It would be difficult to think in the absence of such a recovery in final demand, that emerging markets by themselves could sustain a recovery,” he said.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to
RSS