IMF Official Warns Risks For Low-income Economies In Asia Amid Trade Tensions

Barnama

28-04-2025

Krishna Srinivasan, director of the IMF's Asia and Pacific Department, speaks during an interview with Xinhua in Washington, D.C., the United States, on Oct. 22, 2024. (Xinhua/Hu Yousong)
WASHINGTON, April 28 (Bernama-Xinhua) -- Asia's growth is slowing due to the ongoing trade tensions, Krishna Srinivasan, director of the IMF's Asia and Pacific Department, has said, warning that low-income Asian economies could be hit particularly hard, Xinhua reported.
On Thursday, the IMF projected that growth in Asia and the Pacific would slow to 3.9 per cent this year amid escalating trade tensions, marking a 0.5 percentage point decline from the previous projection.
The downgrade was attributed to "the tariffs, the trade tensions, the heightened uncertainty, and the tightening of financial conditions," Srinivasan told Xinhua in an interview after the IMF released its latest projection for Asia.
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"Heightened uncertainty, further tightening of financial conditions and a further slowdown of external demand, all these could affect the region more negatively," he said.
The IMF official noted that, facing the threat of steep US tariffs, the smaller and low-income economies could be hit "in a much bigger way."
Noting that not all countries have policy space, Srinivasan said, "In that context of a big shock (of tariffs), a big slump in external demand ... plus the fact that you have less policy space, makes these countries much more vulnerable."
"Smaller countries may have less leverage, may have less flexibility to have these negotiations. And so that doesn't bode well," he added.
Looking ahead, Srinivasan encouraged Asian economies to boost domestic consumption and develop a more balanced growth model that relies on both domestic demand and exports.
Major economies like China, India and Indonesia -- along with smaller regional players -- possess substantial domestic demand potential, he said. "So, try to boost consumption, try to boost private investment. All that will help provide a model which is more balanced," he said.