The IMF Warns Asian Nations About Growing Debt and Capital Outflow

The International Monetary Fund has issued a warning. According to the alert, rising interest rates will cause more money to leave Asia and increase debt. This week, the IMF revised its projections for world growth. According to the IMF, the following year will seem to be a worldwide recession.

Recent Asian Economic Conditions

On Wednesday, Anne-Marie Gulde, the Deputy Director of the Asia and Pacific Department at the IMF, revealed some information on CNBC’s “Squawk Box Asia.” She said that Asia now had more debt. She continued by saying that since the global financial crisis, private sector debt has increased. 

But the public sector’s debt has increased since Covid. She emphasized that the Asian economy would suffer from shifting global interest rates.

According to her, the rise in capital flows has reached levels last witnessed during the taper tantrum. It follows that anything that raises interest rates will impact the cost of borrowing in Asia. She identifies it as a pressing issue that they face.

2013 saw a response from investors to the Federal Reserve’s tapering plans. By quickly selling bonds, which caused bond prices to drop, the objective was to limit quantitative easing.

IMF issued a cautionary statement. It claims that Asian countries may have difficulty with the cost of living due to their currencies’ depreciation concerning the stronger U.S. Dollar. In terms of the Yen, the Dollar is at a 24-year high.

In 2023, the IMF forecasts that global growth will slacken to 2.7%. Its July prediction was 0.2 percentage points higher than this.

Additionally, it reduced China’s growth forecasts in Asia to 4.4%. This is lower by 0.2 percentage points than what was anticipated in July. The fund reduced the ASEAN-5 group’s growth estimates by the same amount to 4.9%. Malaysia, Indonesia, Philippines, Vietnam, and Thailand comprise the ASEAN-5 group.

Effects Of the U.K. Crisis

The U.K. bond issue, according to Gulde, won’t have much of an impact on Asian markets. Gulde continued by saying that anything that causes turbulence in the financial markets would affect other economies. 

She said that fewer pension funds are investing in Asia than they formerly did on CNBC. She highlighted that anything that causes instability in the financial markets would find a means to spread and a channel through which to do so. She noted that they don’t know all the channels, but it’s not good news for Asian nations.

Janet Li is Mercer’s Asia Wealth Business Leader. She said Asian exposure to LDIs is lower than in the United Kingdom. She says that long-stream pensions are less common in Asia than lump-sum withdrawal schemes.

Liability-driven investments are used by pension funds to link assets with commitments and pay out pensions. When bond prices dropped, and interest rates rose, pension funds were forced to put up collateral for LDI futures, which is when the U.K. crisis started. Pension funds sold U.K. gilts to deposit more money as insurance against the depreciating value of LDIs.

On Wednesday, Li spoke with Squawk Box Asia on CNBC. The quick answer, according to her, is no when comparing and examining whether patient money in Asia is now more in danger. But she said many defined benefit plans still have long-term obligations that need to be managed. The recent increase in interest rates is to blame for this.

Leave a Reply

Your email address will not be published.


Coins Capital Review, – Is Coins Capital Scam Or Legitimate?

Coins Capital Trading Platform Rating 4.3 Summary Read our Coins Capital review at FStar Capital Forex and Cryptocurrency Trading blog, find the answer to your question “is Coins Capital scam or legit” and much more! Coins Capital Review You have been thinking for a long time if trading is for you. You have finally […]

AI Center Indicts ChatGPT Developer of Trade Law Violations: Claims Bias & Deception

The organization alleges that the creator of ChatGPT has violated Section 5 of the Federal Trade Commission Act with the release of GPT-4. This section of the act prohibits any practices or acts considered deceptive or unfair and that affect commerce. CAIDP has complained to the US Federal Trade Commission, intending to prevent the distribution […]

Investors Excited As XRP Market Capitalization Hits $20 Billion

It’s been wide jubilation today after XRP investors heard the announcement that the market capitalization has surged to $20 billion. XRP: a cryptocurrency developed and managed by Ripple, a San Francisco, United States, distributed data company. It was gathered that the coin itself responded to this development through a climb in price – it was […]

GlobalTrades Review, – Is Global Trades Scam or a Good Broker?

GlobalTrades Trading Platform Rating 4.6 Summary Read our Global Trades review at FStar Capital Forex and Cryptocurrency Trading blog, find the answer to your question “is scam or legit” and much more! GlobalTrades Review As people look at cryptocurrencies and their immense success, they are eager to start their own trading businesses. While […]

Belgium Regulator Sets To Impose New Crypto Ads Rules

The Belgium government has mandated that every firm offering crypto advertisements should register with it before launching any campaign. Henceforth, any crypto advertisement without the government’s backing would be treated as an offense with heavy consequences. According to the report, the Financial Services and Markets Authority (FSMA) of Belgium recently announced that every potential crypto […]