Tokyo. Policymakers in Asia need to put greater emphasis on “growth-friendly” fiscal policy to sustain growth momentum in the face of demographic changes that could weigh on their economies, a senior official of the International Monetary Fund said.

Aging populations and falling birth rates are shrinking labor forces in Asian countries, which will cause economic growth to slow, Mitsuhiro Furusawa, deputy managing director of the IMF, told a forum on fiscal policy on Wednesday.

“Sound fiscal management becomes more challenging in the face of these demographic changes because increased spending for aging populations and shrinking tax bases will undermine fiscal soundness,” he said.

Furusawa said global growth is still modest after the global financial crisis and medium-term prospects are less optimistic for some advanced economies and especially for emerging markets.

Japanese Vice Finance Minister Ichiro Miyashita, speaking at the forum, said the country is “surely going to raise” the sales tax to 10 percent from 8 percent in April 2017 as planned.

Reuters

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Source: The Jakarta Globe