Senior IMF official:
China’s property sector problems have not been addressed in a comprehensive way, leading to consumer confidence plummeting.The risk of deflation in China has increased, which hurts Asian countries that must compete with China’s falling export prices.Any kind of political uncertainty has a bearing on sentiment and economic activity, when asked about Japan’s general election outcome.Since the Bank of Japan is normalizing monetary policy and interest rates are rising, it’s even more important for Japan to start fiscal consolidation in earnest.Any new initiative or fiscal support that Japan deploys should be targeted and funded within the budget, instead of by issuing more debt.Any further rate hikes by the Bank of Japan should be gradual and data-dependent.Japan is fully committed to a flexible exchange rate regime, when asked about authorities’ recent remarks describing yen moves as ‘one-sided and sharp.’
***
Despite it being the IMF its hard to argue with any of those points!
This article was written by Eamonn Sheridan at www.forexlive.com.
