'Second Engine of Growth' to Bolster Asian Leadership

Conference focuses on Asia's leadership role in the global economy

IMF to reflect Asia's stronger economic weight

Asia encouraged to play greater part in shaping multilateral policies

“In the past, Asia’s growth was heavily dependent on exports. But with Asia’s major trading partners—in particular Europe and the U.S.—entering a period of extensive balance sheet repair, export markets may not be so buoyant. A second, internal, engine of growth is needed to sustain Asia’s strong performance,” Strauss-Kahn said in his opening address to around 1,000 high-level delegates and media at the conference held in the city of Daejeon.

The conference, that aims to learn lessons from the global economic crisis, assess the growth drivers for Asia in the post-crisis period, and listen to Asia’s views, was launched with a video welcome to a packed opening plenary by President Lee Myung-bak of South Korea, followed by addresses by Finance Minister Yoon Jeung-Hyun and the IMF Managing Director.

“In line with individual countries’ efforts to boost domestic demand, we should also continue measures to expand overall demand in the regional market, so that the region would become more resilient to external shocks in the future,” Yoon said. “With the center of gravity of the world economy shifting toward Asia, countries in Asia should fulfill their roles as responsible members of the global economy.”

Already under way

Strauss-Kahn said that many of the changes needed to foster the second engine of growth for Asia were already under way across the region.

These include stronger social safety nets, which can boost private consumption by reducing the need for precautionary saving; better infrastructure, to encourage private investment; financial sector deepening to support both consumption and investment by small and medium-sized enterprises, but also by major companies seeking financing for large investment projects; and, where needed, more flexibility in exchange rates.

Strauss-Kahn said that as Asia’s economic weight in the world continues to rise, its stake in the economic performance of other countries was rising too. “This increases the value—to Asia—of having an effective international policy dialogue—to assess global economic risks, and reach collaborative decisions on the policies needed by each country to tackle global challenges.”

“I sincerely hope,” said Yoon, “that the IMF will join hands with Korea in efforts to serve as a bridge between...