Global challenge

May 12, 2016

THE Asia Pacific region has a huge potential to support the rising global demand and further solidify its position as the major contributor to global economic expansion.

Reserve Bank of Fiji governor Barry Whiteside said the International Monetary Fund’s Regional Economic Outlook on Asia and the Pacific highlighted that slower global recovery constituted a modern recovery in advanced economies and strong activities in emerging developing economies.

The report, with the theme “Building on Asia’s strengths during turbulent times” was launched in Suva yesterday.

Mr Whiteside said the assessment of Asian economies by IMF would assist Fiji and the South Pacific region in moving forward.

“We are under no illusions that the outlook for the world economy has weakened and risks have intensified,” he said.

“The fund’s assessment shows that the impact of lower commodity prices on commodity importers have not been dramatic.

“Commodity exporters have had to adjust to the very difficult situation that had set in against this background where global growth has been labelled too slow.”

He said the growth outlook for the South Pacific region for 2016 had also deteriorated.

Mr Whiteside said the report discussed the challenges facing the region and made recommendations on how economies could deal with the challenges.

“It is clear that Asia remains the driver of world economic growth.

“Asia’s strong economic performance over the past few years enabled it to better withstand the adverse impact.”

However, Mr Whiteside said new risks had now emerged and the region faced further challenges from the deterioration of global conditions.

For Fiji and the other smaller Pacific Island countries, Mr Whiteside said, infrastructure gaps and geographic isolation made them vulnerable to natural disasters and climate change.

IMF resident representative Tubagus Feridhanusetyawan said given the high reliance on remittances, de-risking by financial institutions could affect financial inclusion and intermediation for Pacific Island countries.

Mr Feridhanusetyawan said for Pacific Island countries, growth continued to be moderate, and inflation remained low in line with the global fuel and food prices.

He said the Pacific should focus on building policy buffers, enhance fiscal framework whereby they could use fiscal anchors to manage revenue volatility and strengthen medium term fiscal framework.

Sorce: Fiji Times