(Bloomberg) — Asian economies are resilient enough to ride out turbulence, International Monetary Fund economists said, underscoring the importance of taking turmoils in stride at a time when the region faces various internal risks in addition to Donald Trump’s return to the White House.
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Asia remains a key engine of global economic growth, but this year it has seen a rise in uncertainties that span a range of factors. Japan’s surprising leadership transition, South Korea’s bungled martial-law command, and the threat of tariffs from Trump have made the future harder to predict in the region.
While declining to comment on specific countries and political situations, IMF Asia-Pacific division chief Alasdair Scott highlighted the resilience of the region and said it maintains a great deal of upside growth potential.
“We’ve already seen actually that there is that resilience,” he said Monday in an interview in Seoul, after earlier pointing to the brevity of the August market turmoil that followed the Bank of Japan’s July rate cut. There are challenges to navigate including longer-term issues such as demographics and labor, but “there’s lots of upside growth potential,” he said.
Scott and Johannes Wiegand, chief IMF economist for the Asia-Pacific, are visiting Seoul this week to attend a joint conference with the Korea Institute for International Economic Policy on Trump and the world economic outlook.
The latest event rocking the region has been a martial-law debacle in South Korea that sparked an opposition campaign to impeach President Yoon Suk Yeol. Yoon has apologized for his decree last Tuesday that lasted several hours, and has since left state affairs in the hands of the prime minister and the ruling party.
The won depreciated as much 1.1% against the dollar on Monday after South Korea’s parliament failed to pass an impeachment motion against Yoon over the weekend. The opposition plans to push for another motion later this week. The Kospi stock index fell as much as 2.8% Monday in one of the biggest slides since August, when an unexpected interest-rate hike by the Bank of Japan sent markets tumbling across the region.
“We’ve seen momentary episodes of turbulence, like in early August when the Topix market decreased very rapidly,” the IMF’s Scott said. “But you come back to it a week or two later and things have come back. So on our side we are trying to take a longer point of view.”