Economic activity in Asia has picked up in 2012 following last year’s slowdown, but the region’s prospects are being dimmed by the fragile global economy, says the International Monetary Fund (IMF).
Asia’s economy is expected to grow at 6 percent this year—roughly the same as in 2011—before gradually recovering to about 6½ percent in 2013, said Anoop Singh, head of the IMF’s Asia and Pacific Department.
But the fragile world economy continues to pose challenges for the region, particularly the euro debt crisis, rising energy prices, and volatile capital flows, the IMF said in a statement on April 21.
“Strong economic and policy fundamentals have helped buffer the region’s economies against spillovers from the euro area, but a further sharp fall in exports to advanced economies and capital outflows would severely impact Asia both directly, and through knock-on effects on domestic demand,” said Singh.
In recent months, emerging Asia has been the fastest growing region in the world, led by China and India.
China’s growth is forecast to moderate to about 8¼ percent in 2012 as the country pursues more balanced growth and a soft landing. The economy is likely to gather momentum in the second half of this year and 2013, reaching growth rates of 8¾ percent in 2013.
Inflation in Asia is also expected to decline modestly in 2012 to around 3½ percent, partly in response to an easing of food and commodity prices.
“Inflation is declining in many countries, but it remains close to, and even above, some explicit and implicit target ranges,” said Singh “and therefore there is a need to be concerned as overheating pressures can again build up.”
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