Asia Pacific faces risks from financial tightening, slowdown in China: IMF

The Asia Pacific region is facing three main risks, including due to global financial tightening and a slowdown in China, according to an IMF official.

Shanaka Jayanath Peiris, Division Chief of Regional Studies Division, Asia Pacific Department at the IMF, also said that currencies in the region have depreciated sharply while public debt ratios have increased.

"We have identified three main risks to the region -- global financial tightening, Ukraine-Russia war, which has raised commodity prices, but (has) also slowed external demand particularly from Europe and the slowdown in China," Peiris told PTI.

He was speaking on the sidelines of the NSEIMF Seminar on Regional Economic Outlook for Asia-Pacific here on Wednesday.

At the seminar, he shared the IMF's views on the current risks that the Asian economies face and the implications for India.

"We have revised down the (growth) forecast but India is still relatively a bright spot in the outlook for the region... we have 6.1 per cent (growth forecast) for India for 2023, which is one of the strongest in the region. That is one aspect," he said.

The second one is of course that the global financial tightening means the dollar is strengthening and that has an impact on India also, he said.

"... That can be inflationary as well, but these are the things which central banks need to take into account when they take their monetary policy stance and have a balanced inflation outlook," he noted.

According to him, fiscal policy also has a role to play in complementing monetary policy in stabilising debt while providing temporary, targeted and budget-neutral support to the vulnerable.

Going forward, countries in the Asia Pacific region should stay the course on tightening monetary policy, he said.