After a subdued performance in 2012, Asia’s economy is set to gain momentum gradually to log a 6 percent growth in 2013, forecasts the International Monetary Fund (IMF).
The outlook for next year is higher than IMF’s estimate of about 5½ percent regional growth for 2012. But though this year’s growth projections are about ½ percentage point below 2011, the region still expanded about 2 percentage points faster than the global average, the organization said in a December 18 media statement.
Asia’s performance in 2013 is expected to benefit from a stronger external demand and an accommodative monetary stance across the region.
But Anoop Singh, director of the IMF’s Asia and Pacific Department, said external risks for Asia remain “considerable,” largely arising from the unresolved eurozone crisis and the threat of a U.S. fiscal cliff.
“In the event of a severe global slowdown, falling external demand would exert a powerful drag on Asia’s most open economies,” said Singh.
There are also risks and challenges from within the region, including that of falling into a “middle-income trap,” where the odds of a sustained growth slowdown is 1:7 for fast-growing middle-income countries against 1:11 for low-income economies, Singh added.
Other internal risks are those connected to rapid population aging, which will hinder growth in many high- and middle-income countries, and an unequal and narrow-based growth within Asia’s low-income economies.
Singh said that to minimize these threats, Asia needs to implement a diverse policy agenda, including supporting private sector-led investments, promoting reforms in the goods and labor markets, addressing rapid demographic change, and deepening regional trade integration.
Photo: melenama
