Beware of strangers bearing capital, IMF warns Asia

Capital inflows are a sign of Asia’s continued economic improvement, but are creating financial imbalances, according to the IMF.

Asian policymakers face “a delicate balancing act” as the region’s economies return to stronger growth this year, the IMF says in its latest Asia economic outlook.

It warns that easy money and capital inflows are helping to build financial imbalances and driving up asset prices in several of the region’s economies, creating the potential for overheating if not watched carefully.

“Financial imbalances are often persistent and cannot be easily unwound, and output levels are close to or slightly above trend in most economies hence, monetary policymakers should stand ready to respond early and decisively,” says the IMF report.

Despite the note of caution, it...

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