The IMF painted a mixed picture for Asia’s top economies trimming its Chinese growth forecasts but predicting Japan’s fiscal inducement will help end years of stagnation and Indian growth will accelerate.
For the region as a whole, it predicted growth will reasonably rising to about 5.75 percent this year, boosted in part by a recovery in demand from outside the region and firm consumption and private investment within.
But the IMF’s World Economic Outlook also cautioned that possible dangers inside and outside the region could upset the positive scenario. The potential impact of external risks on Asia remains considerable. In the event of a severe global slowdown, falling external demand would exert a powerful drag on Asia’s most open economies.
It mentioned uneven financial and rising asset prices as risk factors and also warned of potential disruptions to trade from territorial disputes, an apparent reference to ongoing rows China has with Japan and some Southeast Asian nations over maritime claims.
For China, Asia’s largest economy, the Washington-based IMF lowered its growth forecast for this year to 8.0 percent, a day after Beijing announced a shock downturn in the first quarter. The IMF cut its prediction for growth in China, Asia’s largest economy, from the 8.2 percent it had given in January.
Beijing’s January-March figure compared with a median 8.0 percent forecast in a poll of economists by AFP and marked a slowdown from 7.9 percent in the previous quarter.
China’s 2012 economic growth of 7.8 percent was its slowest in 13 years amid weakness domestically and in overseas markets. Authorities last month kept their growth target for this year unchanged at a conservative 7.5 percent.
The fund also cut its forecast for China’s growth in 2014 from 8.5 percent to 8.2 percent.
The IMF was more optimistic about Japan, tipping its economy to grow 1.6 percent in 2013 and 1.4 percent in 2014, up from its January forecast of 0.4 percent and 0.7 percent.
In India, Asia’s third-largest economy, the IMF said growth will accelerate from 4 percent last year to 5.75 percent in 2013 and 6.2 percent the next year. External demand, solid consumption, a better monsoon season, and policy improvements are expected to lift activity in India.
The IMF said growth in Southeast Asia’s five biggest developing countries — Indonesia, the Philippines, Thailand, Vietnam and Malaysia — is projected at 5.9 percent this year, slightly down from 6.1 percent in 2012.