IMF head warns of ‘exceptional’ uncertainty as zero-Covid hits China’s economy
Staff, 2022-12-02 01:39:14,
The head of the IMF has warned Asia’s leaders and central bankers to brace for “exceptional” uncertainty as China’s zero-Covid policy hurts its economy and inflationary pressures from Russia’s invasion of Ukraine hit the region.
China, the world’s second-biggest economy, is forecast to grow at its slowest pace in about three decades as Beijing tries to navigate an exit from President Xi Jinping’s policy of eliminating all coronavirus cases.
Consumer sentiment among the country’s 1.4bn people has been battered by relentless lockdowns and travel restrictions, exacerbating a severe property sector slowdown and the fallout from rising global inflation.
Speaking to an Association of Southeast Asian Nations summit in Singapore, Kristalina Georgieva, the managing director of the IMF, said the outlook was “exceptionally uncertain” and “dominated by risks”.
“We don’t know how long these shocks last, or what other shocks may come, and for this reason we need to rebuild and preserve buffers and be prepared to use the full policy toolkit,” Georgieva said.
While inflation is expected to average a relatively low 4 per cent in Asia this year, Georgieva said inflationary pressures are rising and noted problems stemming from currency depreciation against the dollar.
“Foreign exchange interventions may be used to counter disorderly market conditions and may be justified when frictions emerge in shallow foreign exchange and debt markets,” she…
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