The IMF said Asian central banks generally have room to lower interest rates to support domestic demand and offset the impact of the escalating global trade war, with the region in much stronger shape than before the Asian financial crisis.
Inflation in the region is at par or even below central banks’ target ranges, which should allow more monetary easing, IMF Asia and Pacific Department director Krishna Srinivasan said yesterday.
While that could weaken currencies, especially if rates in the US stay higher for longer, “what we are advising countries is to let the exchange rate be the shock absorber, and let monetary policy provide you space you need to adjust” to the tariff shock, he said.
Photo: EPA-EFE
The recommendation comes as US President Donald Trump’s tariffs threaten to slow the global economy, with the export-driven Asian region set to be among the hardest hit. The IMF expects Asia’s economy to grow just 3.9 percent this year and 4 percent next year, as it deals with a “double whammy” from weaker external demand and higher US tariffs, Srinivasan said.
That represents a cumulative downgrade of 0.8 percentage points from the IMF’s earlier forecasts, its sharpest adjustment since the COVID-19 pandemic, he said, adding that the new forecasts face “significant downside risks,” depending on the outcome of trade negotiations with the US.
On the plus side, the region’s fundamentals are “much, much better” than during the 1997 to 1998 Asian financial crisis, when the IMF bailed out Indonesia, South Korea and Thailand, Srinivasan said.
Differences include credible policy frameworks, independent central banks and less currency mismatch in their balance sheets, he added.
The IMF urged Asia to look toward its domestic economy to drive growth, and undertake the necessary structural reforms to stimulate consumption and investment that remain soft compared with pre-COVID-19 levels.
Lower borrowing costs should help bolster demand and lift countries out of deflationary territory, such as China and Thailand. Any fiscal support should be “targeted and time-bound” since budget deficits remain high post-COVID-19, Srinivasan said.
CHIP RACE: Three years of overbroad export controls drove foreign competitors to pursue their own AI chips, and ‘cost US taxpayers billions of dollars,’ Nvidia said China has figured out the US strategy for allowing it to buy Nvidia Corp’s H200s and is rejecting the artificial intelligence (AI) chip in favor of domestically developed semiconductors, White House AI adviser David Sacks said, citing news reports. US President Donald Trump on Monday said that he would allow shipments of Nvidia’s H200 chips to China, part of an administration effort backed by Sacks to challenge Chinese tech champions such as Huawei Technologies Co (華為) by bringing US competition to their home market. On Friday, Sacks signaled that he was uncertain about whether that approach would work. “They’re rejecting our chips,” Sacks
NATIONAL SECURITY: Intel’s testing of ACM tools despite US government control ‘highlights egregious gaps in US technology protection policies,’ a former official said Chipmaker Intel Corp has tested chipmaking tools this year from a toolmaker with deep roots in China and two overseas units that were targeted by US sanctions, according to two sources with direct knowledge of the matter. Intel, which fended off calls for its CEO’s resignation from US President Donald Trump in August over his alleged ties to China, got the tools from ACM Research Inc, a Fremont, California-based producer of chipmaking equipment. Two of ACM’s units, based in Shanghai and South Korea, were among a number of firms barred last year from receiving US technology over claims they have
It is challenging to build infrastructure in much of Europe. Constrained budgets and polarized politics tend to undermine long-term projects, forcing officials to react to emergencies rather than plan for the future. Not in Austria. Today, the country is to officially open its Koralmbahn tunnel, the 5.9 billion euro (US$6.9 billion) centerpiece of a groundbreaking new railway that will eventually run from Poland’s Baltic coast to the Adriatic Sea, transforming travel within Austria and positioning the Alpine nation at the forefront of logistics in Europe. “It is Austria’s biggest socio-economic experiment in over a century,” said Eric Kirschner, an economist at Graz-based Joanneum
OPTION: Uber said it could provide higher pay for batch trips, if incentives for batching is not removed entirely, as the latter would force it to pass on the costs to consumers Uber Technologies Inc yesterday warned that proposed restrictions on batching orders and minimum wages could prompt a NT$20 delivery fee increase in Taiwan, as lower efficiency would drive up costs. Uber CEO Dara Khosrowshahi made the remarks yesterday during his visit to Taiwan. He is on a multileg trip to the region, which includes stops in South Korea and Japan. His visit coincided the release last month of the Ministry of Labor’s draft bill on the delivery sector, which aims to safeguard delivery workers’ rights and improve their welfare. The ministry set the minimum pay for local food delivery drivers at
RSS