IMF Says Asia May Face Policy Challenges From Rising Capital Flows

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The Managing Director of IMF, Dominique Strauss-Kahn, believes that Asia needs to enhance domestic investment and consumption.

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Asia, who has come up as a global economic powerhouse, until recently used to depend on the exports for its fiscal growth.

The MD said, “Major policy challenges include how best to manage the sharp spring back in capital inflows, and the related risks of overheating and credit and asset bubbles.”

He also said, “The need for Asia to boost its domestic demand has increased with its trading partners, especially advanced economies, entering “a potentially extended period” of lower rates of growth.”

Yoon Jeung-hyun, Finance Minister of South Korea asked the IMF for the remedies to avert another financial setback.

The efforts to resist external shocks on high fluctuations of capital flows are not enough by the developing nations, believes Yoon.

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