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Keeping that economic 'winter' at bay

Every three years, the Washington-based World Bank and its sister body, the International Monetary Fund, hold their annual meetings in an "away" location. Singapore was host in 2006, Japan in 2012. This year, the meeting was in Bali and hosted by Indonesia. IMF managing director Christine Lagarde likened it to a family wedding that takes months of preparation and which finally has a smooth ending. Going by the numbers - nearly 37,000 attended - this was a popular event. Less certain is what lies ahead for the global economy. "Winter is coming," warned the host, President Joko Widodo. For that reason at least, this round felt like the 1998 meeting in Hong Kong at the height of the Asian economic flu.

At the time, most Asian currencies were in free fall and Indonesia's rupiah, particularly so. In that regard, there are similarities with the current scenario with the currencies of China, India and Indonesia all sliding heavily in the year to date. However, this risk has been mitigated to an extent by the lessons from the previous experience, the strength of Asia's markets, and their unquestioned promise as the centres of future growth. Significantly, IMF members have agreed to refrain from competitive devaluations and to not target exchange rates to keep exports competitive. Hopefully, they will keep their word. A major Chinese devaluation in January 1994 contributed to the subsequent Asian financial contagion.

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A version of this article appeared in the print edition of The Straits Times on October 17, 2018, with the headline 'Keeping that economic 'winter' at bay'. Print Edition | Subscribe