Taiwan is at high risk of deflation and Japan, Hong Kong and Germany are vulnerable to an accelerating pace of price declines, the IMF warned on Sunday in a blunt assessment.
The report found a low chance of deflation in the US, but added that there are "considerable uncertainties" in that outlook.
"There has been a clear increase in the vulnerability to deflation for a number of industrial and emerging market economies," the IMF said.
Low post-war inflation rates, the bursting of an equity price bubble, rising banking sector stresses in some economies and declining credit growth are to blame, the IMF concluded.
The study, put together by a special task force overseen by IMF chief economist Kenneth Rogoff, comes at a time of increased worries about deflation around the world.
The US Federal Reserve has recently raised concerns about deflation in the US and fears about deflation in Germany's stagnant economy have been on the rise.
The IMF report warned that deflation, defined as a sustained decline in an aggregate measure of prices, is seldom benign and is difficult to anticipate.
The situation in Asian economies, some already struggling with falling prices, could get worse, the report said. In Japan there is a high risk that deflation could accelerate if economic growth remains flat and unemployment rates rise.
Partly due to cheap imports from China, Taiwan and Hong Kong may also face a more difficult price picture. The IMF said it had insufficient evidence to say China is exporting deflation.
The US made it into the low risk category.
"The lower risk reflects an expected narrowing in the output gap, relief provided by a recent depreciation of the US dollar, the resilience in the financial sector, the availability of policy stimulus and the explicit willingness of policy makers to take pre-emptory action," the IMF said.
Nevertheless, there are considerable uncertainties -- related to equity price declines still in the pipeline, excess capacity in several major sectors and the impact of security and geopolitical concerns, it said.
China is also in the low risk category with strong economic growth and policy stimulus likely to contain deflation, the IMF said. But its large pool of under-utilized labor and excess capacity in many sectors may pose a problem.
Several other emerging market economies also fit into the low but not minimal risk category. These include Korea, India, Mexico, Poland and Thailand.
There is a "considerable" probability Germany will face deflation over the next year if economic growth meets projections of 0.5 percent this year, the IMF said. If the economy contracts the risks are even higher.
It was late morning and steam was rising from water tanks atop the colorful, but opaque-windowed, “soapland” sex parlors in a historic Tokyo red-light district. Walking through the narrow streets, camera in hand, was Beniko — a former sex worker who is trying to capture the spirit of the area once known as Yoshiwara through photography. “People often talk about this neighborhood having a ‘bad history,’” said Beniko, who goes by her nickname. “But the truth is that through the years people have lived here, made a life here, sometimes struggled to survive. I want to share that reality.” In its mid-17th to
‘MAKE OR BREAK’: Nvidia shares remain down more than 9 percent, but investors are hoping CEO Jensen Huang’s speech can stave off fears that the sales boom is peaking Shares in Nvidia Corp’s Taiwanese suppliers mostly closed higher yesterday on hopes that the US artificial intelligence (AI) chip designer would showcase next-generation technologies at its annual AI conference slated to open later in the day. The GPU Technology Conference (GTC) in California is to feature developers, engineers, researchers, inventors and information technology professionals, and would focus on AI, computer graphics, data science, machine learning and autonomous machines. The event comes at a make-or-break moment for the firm, as it heads into the next few quarters, with Nvidia CEO Jensen Huang’s (黃仁勳) keynote speech today seen as having the ability to
NEXT GENERATION: The company also showcased automated machines, including a nursing robot called Nurabot, which is to enter service at a Taichung hospital this year Hon Hai Precision Industry Co (鴻海精密) expects server revenue to exceed its iPhone revenue within two years, with the possibility of achieving this goal as early as this year, chairman Young Liu (劉揚偉) said on Tuesday at Nvidia Corp’s annual technology conference in San Jose, California. AI would be the primary focus this year for the company, also known as Foxconn Technology Group (富士康科技集團), as rapidly advancing AI applications are driving up demand for AI servers, Liu said. The production and shipment of Nvidia’s GB200 chips and the anticipated launch of GB300 chips in the second half of the year would propel
State-run CPC Corp, Taiwan (CPC, 台灣中油) yesterday signed a letter of intent with Alaska Gasline Development Corp (AGDC), expressing an interest to buy liquefied natural gas (LNG) and invest in the latter’s Alaska LNG project, the Ministry of Economic Affairs said in a statement. Under the agreement, CPC is to participate in the project’s upstream gas investment to secure stable energy resources for Taiwan, the ministry said. The Alaska LNG project is jointly promoted by AGDC and major developer Glenfarne Group LLC, as Alaska plans to export up to 20 million tonnes of LNG annually from 2031. It involves constructing an 1,290km
RSS