MercoPress. South Atlantic News Agency

IMF says China can partially offset the impact of a global crisis

Yen current level not an immediate risk according to Anoop Singh

China has the scope to respond if global economic risks materialize, and the country's response could partially but not entirely offset the impact of a global crisis, the International Monetary Fund's Asia and Pacific director said on Thursday.

Anoop Singh, director of the IMF Asia and Pacific department, added that the Yen's current level did not pose an immediate risk to Japan's economic recovery and that recent data reinforced the Bank of Japan's view that the economic recovery was taking hold.

Worries have mounted in Japan that the Yen strength would damage the country's export-reliant economy.

Singh was speaking at a briefing on the IMF regional economic outlook report for the Asia-Pacific region, which warned that an escalating European debt crisis and US slowdown could bring severe spill-over effects into Asia.

IMF has cut its growth forecasts for Asia over worries about Euro zone debt and new fears for the US economy, saying that risks for Asia were “decidedly tilted to the downside” because of these concerns over its two major export zones.

It said GDP growth across Asia would average 6.3% in 2011, and 6.7% in 2012. In April, it had predicted close to 7% growth in both years.

IMF also warned about a risk of capital outflows from the region, and the possibility that oversees investors may reverse the large positions they have built in Asian markets since 2009.

Finally the IMF indicated that Asian policymakers were faced with “a delicate balancing act: they need to guard against risks to growth but also limit the adverse impact of prolonged easy financial conditions on inflation”.