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PR Newswire
22-10-2010, 07:15 AM
Oct 22, 2010
Capital inflows 'may destabilise Asia'
STRONG inflows of capital into Asia, coupled with rising inflation and climbing asset prices, are threatening to destabilise regional economies, the World Bank warned yesterday.
Already, the liquidity streaming into countries like Singapore, South Korea, Thailand and the Philippines has sent their currencies soaring and fuelled fears of property and stock market bubbles.
This complicates Asia's existing problem of how to maintain high growth rates amid a sluggish recovery in the developed world, said Mr Vikram Nehru, the World Bank's chief economist for the East Asia and Pacific region.
He is in town to launch the bank's latest twice-yearly update on economies in his region, and said the current situation of huge capital inflows is similar to that preceding the 1997 Asian financial crisis.
There are indicators that some Asian economies are overheating, and central banks need to calibrate their policies to address both inflation and capital flows.
But he said policymakers so far have tackled these problems well, with calibrated and customised measures.
'We don't see any reason for deep worry but we see incipient risks, rising risks,' he told about 20 participants at a breakfast meeting hosted by the Institute of Policy Studies at Orchard Hotel.
FIONA CHAN
Capital inflows 'may destabilise Asia'
STRONG inflows of capital into Asia, coupled with rising inflation and climbing asset prices, are threatening to destabilise regional economies, the World Bank warned yesterday.
Already, the liquidity streaming into countries like Singapore, South Korea, Thailand and the Philippines has sent their currencies soaring and fuelled fears of property and stock market bubbles.
This complicates Asia's existing problem of how to maintain high growth rates amid a sluggish recovery in the developed world, said Mr Vikram Nehru, the World Bank's chief economist for the East Asia and Pacific region.
He is in town to launch the bank's latest twice-yearly update on economies in his region, and said the current situation of huge capital inflows is similar to that preceding the 1997 Asian financial crisis.
There are indicators that some Asian economies are overheating, and central banks need to calibrate their policies to address both inflation and capital flows.
But he said policymakers so far have tackled these problems well, with calibrated and customised measures.
'We don't see any reason for deep worry but we see incipient risks, rising risks,' he told about 20 participants at a breakfast meeting hosted by the Institute of Policy Studies at Orchard Hotel.
FIONA CHAN
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