India, China to boost Asian growth: IMF
The IMF also predicted 8.3 per cent growth for India in 2006 and 7.3 per cent the following year.
By Agencies |
SINGAPORE: Asia is set for another year of robust growth as the twin engines of China and India drive the emerging economies and Japan extends a recovery from its long slump, the IMF said on Thursday.
Emerging Asia will see growth of 8.3 per cent this year and 8.2 per cent in 2007, after 8.5 per cent in 2005, the International Monetary Fund said in its twice-yearly World Economic Outlook report.
The IMF had predicted growth of 7.9 per cent in 2006 and 7.6 per cent next year in its last report in April.
"Growth continues to run above 8 per cent in emerging Asia, with much of the momentum due to vibrant expansions in China and India," the Washington-based global economic watchdog and lender said.
"The outlook is for continued strong growth ... reflecting more favorable global economic conditions, continued high growth in China, and moderate deceleration in India after the strong momentum in 2005 and early 2006."
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China's economy, the fourth largest in the world, will grow 10 per cent this year and the next, faster than the April estimates of 9.5 per cent and 9.0 per cent, the IMF said.For India, growth is projected at 8.3 per cent in 2006 and 7.3 per cent the following year, it said.
In April it had forecast the South Asian dynamo's economy would expand 7.3 per cent this year and 7.0 per cent in 2007, after 8.5 per cent last year.
Japan, Asia's largest economy, is predicted to grow 2.7 per cent in 2006, up from 2.6 per cent in 2005, before slowing to 2.1 per cent in 2007.
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For Asia's newly industrialised economies (NIEs), South Korea, Taiwan, Hong Kong and Singapore, overall growth in 2006 has been revised downwards to 4.9 per cent from 5.2 per cent, and in 2007 to 4.4 per cent from 4.5 per cent.The IMF said this softer outlook reflected slower import demand from advanced economies, especially the United States, a key market for them.
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Indonesia, Thailand, the Philippines and Malaysia are collectively expected to grow 5.0 per cent in 2006 and 5.6 per cent next year against earlier predictions of 5.1 per cent and 5.7 per cent.Despite the overall upbeat outlook, the IMF cautioned of several risks, including slowdowns in the United States and Japan, both key markets for Asia's export-led economies.
Asia is also likely to be vulnerable should China's red-hot economy hit a rough patch, it said.
Other potential threats are a widely-feared bird flu pandemic outbreak and a breakdown in efforts to revive the stalled Doha Round of trade liberalization talks, the IMF said.
Asia's substantial foreign reserves build-up and persistent current account surpluses have strengthened the region's ability to withstand financial market turbulence but the region should press ahead with structural reforms to improve its defences against external risks, the IMF said.
"Policymakers across the region should take advantage of the broadly favorable growth outlook to implement structural reforms aimed at promoting fiscal sustainability and reducing vulnerabilities," it said.
Asian economies with significant public debt or budget deficits, including the Philippines, Indonesia and India, should work at improving their fiscal positions, said the IMF.
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