Macron’s win is ‘good news’ for trade-reliant Asia: IMF

The Managing Director of the International Monetary Fund (IMF) Christine Lagarde. (AFP)
Updated 10 May 2017

Macron’s win is ‘good news’ for trade-reliant Asia: IMF

SINGAPORE: Emmanuel Macron’s victory in the French presidential election is “good news” for trade-reliant Asia as it eases fears of rising protectionism in Europe, the International Monetary Fund (IMF) said Tuesday.
Changyong Rhee, director of the fund’s Asia and Pacific Department, said Macron’s win over far-right candidate Marine Le Pen, an economic nationalist, had made him more optimistic that major trade tensions would ease.
“I think the result of the French elections really show that it is good news to open trade and globalization and it reduces the uncertainties of the euro zone,” Rhee said.
The IMF’s latest economic outlook had flagged increasing protectionism in Asia’s major trading partners and tightening global financial conditions as key downside risks to regional growth.
The IMF also called on Asian economies to learn from Japan’s experience and act early to cope with rapidly aging populations, warning that parts of the region risk “getting old before becoming rich.”
Asia has enjoyed substantial demographic dividends in the past decades, but the growing number of elderly is set to create a demographic “tax|” on growth, the IMF said in its economic outlook report.
“Adapting to aging could be especially challenging for Asia, as populations living at relatively low per capita income levels in many parts of the region are rapidly becoming old,” the report said. “Some countries in Asia are getting old before becoming rich.”
The population growth rate is projected to fall to zero for Asia by 2050 and the share of working-age people — now at its peak — will decline over the coming decades, the report said. The share of the population aged 65 and older will increase rapidly and reach close to two-and-a-half times the current level by 2050, it said.
That means demographics could subtract 0.1 percentage point from annual global growth over the next three decades, the report said. The challenges are particularly huge for Japan, which faces both an aging and shrinking population. Its labor force shrank by more than 7 percent in the past two decades, the IMF said.
“Japan’s experience highlights how demographic headwinds can adversely impact growth, inflation dynamics and the effectiveness of monetary policy,” the report said.
The IMF called on Asian nations to learn from Japan’s experience and deal with demographic headwinds early, such as by introducing credible fiscal consolidation plans, boosting female and elderly labor force participation and revamping social safety nets.


Japan’s capital sees prices fall most in over 8 years as COVID-19 pain persists

Updated 27 November 2020

Japan’s capital sees prices fall most in over 8 years as COVID-19 pain persists

  • Tokyo core CPI marks biggest annual drop since May 2012
  • Data suggests nationwide consumer prices to stay weak

TOKYO: Core consumer prices in Tokyo suffered their biggest annual drop in more than eight years, data showed on Friday, an indication the hit to consumption from the coronavirus crisis continued to heap deflationary pressure on the economy.
The data, which is considered a leading indicator of nationwide price trends, reinforces market expectations that inflation will remain distant from the Bank of Japan’s 2% target for the foreseeable future.
“Consumer prices will continue to hover on a weak note as any economic recovery will be moderate,” said Dai-ichi Life Research Institute, which expects nationwide core consumer prices to fall 0.5% in the fiscal year ending March 2021.
The core consumer price index (CPI) for Japan’s capital, which includes oil products but excludes fresh food prices, fell 0.7% in November from a year earlier, government data showed, matching a median market forecast.
It followed a 0.5% drop in October and marked the biggest annual drop since May 2012, underscoring the challenge policymakers face in battling headwinds to growth from COVID-19.
The slump in fuel costs and the impact of a government campaign offering discounts to domestic travel weighed on Tokyo consumer prices, the data showed.
Japan’s economy expanded in July-September from a record post-war slump in the second quarter, when lockdown measures to prevent the spread of the virus cooled consumption and paralyzed business activity.
Analysts, however, expect any recovery to be modest with a resurgence in global and domestic infections clouding the outlook, keeping pressure on policymakers to maintain or even ramp up stimulus.