IMF calls for cooperation in Northeast Asia
TOKYO ― International Monetary Fund (IMF) Managing Director Christine Lagarde expressed concerns Thursday that the political wrangling between Korea, Japan and China is posing a further threat to the world’s already fragile financial health.
“We would hope at the IMF meetings that longstanding differences concerning territorial matters can be resolved smoothly so that economic co-operation can take over and contribute to the stability of the world and to this part of the world,” she said at the IMF and World Bank annual meetings in Tokyo.
Korea and Japan will let their expanded currency swap arrangement expire at the end of this month amid a bitter diplomatic row over the islets of Dokdo.
Lagarde appeared more worried about the tension between Japan and China, which are feuding over island chains in the East China Sea, and stressed that stability in Northeast Asia is “very important’’ for the global economy.
The strain between the countries was evident in Tokyo, when China refused to dispatch its finance minister and top central banker. Discussing ways to combat a worldwide spread of the economic slowdown is obviously awkward without the involvement of China, but that is what Lagarde has to deal with now.
As for the situation in Europe, Lagarde believes that Greece will at need at least two more years before it manages to navigate out of its current mess and actually manage a fiscal consolidation program.
Greece is going through a painful round of austerity and spending cuts imposed on the country in return for promised loans and debt relief worth about 347 billion euros ($448 billion). The belt-tightening has forced Greece into its fifth year of recession, with contraction of 3.8 percent anticipated for 2013.
Jim Yong Kim, the Korean-born new chief of the World Bank, vowed commitment to help low-income families in countries experiencing slow or no growth.
“The economic announcements emanating in recent weeks have been sobering. Everyone is vulnerable during times of uncertainty, but especially the poor who have few, if any, safety nets and resources, and live from day to day,’’ he said.
Kim said it will be critical to ensure that developing regions in Asia, Africa and Latin America manage to retain the fruits of rapid economic growth over the past five years in the face of a worsening global economy.
Kim was particularly worried about higher food prices in developing countries, which are often a threat to livelihoods there.
“Food prices remain high and volatile; growth in high-income countries is weak; and developing countries, which have been the engine of growth, will not be immune to the increased uncertainty in the global economy,’’ he said. <The Korea Times/Kim Jae-won>