## Asia: Leading the Global Recovery

_IMF Blog, April 29, 2010_

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## Bibliographic details
- Authors: Anoop Singh
- Published: April 29, 2010

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### Near-term growth outlook and drivers
- Asia is leading the global recovery as the world climbs out of its deepest recession in over half a century.
- Asia is expected to grow by 7 percent in 2010 and 2011.
- Emerging Asia is expected to grow by 8.7 percent each year in 2010 and 2011.
- These performances make significant contributions to global growth of 4.2 percent in 2010 and 4.3 percent in 2011.
- Key drivers:
  - Strong recoveries in China, India, and other countries in the region.
  - Global inventory restocking, particularly in the United States, fueling Asian production and exports late into 2010.
  - Domestic demand momentum in Asia, with consumption boosted by high asset values and consumer confidence and investment helped by rising capacity utilization.

### China’s role and spillovers
- China’s growth measured 11.9 percent in the first quarter.
- China is expected to average 10 percent growth for 2010 as a whole.
- The strong recovery in China reflects a combination of strong private demand and government efforts to catalyze consumption and ramp up infrastructure investment.
- China’s strong recovery is producing positive spillovers for the rest of the region, especially for commodity and capital goods exporters.
- Policy action in China:
  - As recovery takes hold, the government has begun to cool down the rapid pace of credit growth to safeguard credit quality.

### Structural changes in the recovery
- This recovery differs from past episodes in several ways:
  - For the first time in recent history, Asia’s contribution to global growth outstrips that of other individual regions during a recovery from a global recession.
  - The bounceback is not driven solely by exports; domestic demand—including private demand—is playing a significant role.
  - Capital inflows to Asia are surging, driven by high liquidity in advanced countries and attractive growth prospects and resilient policy frameworks in Asia.

### Risks and policy challenges
- Near- and medium-term risks:
  - Continued large-scale capital inflows could raise the risks of inflation, asset price booms and busts, and macroeconomic volatility.
  - A common medium-term challenge is rebalancing many Asian economies away from heavy reliance on exports by strengthening private demand.
- Policy measures to nurture private demand:
  - Strengthen and develop financial sectors.
  - Develop social insurance systems to lessen the motivation for precautionary saving.
  - Adopt a stronger exchange rate as part of the package to raise household incomes and consumption over the medium term.
- The author indicates further discussion of these and other challenges will follow in subsequent pieces.

*Source: Asia: Leading the Global Recovery — Anoop Singh, April 29, 2010*

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## References

- [Regional Economic Outlook](http://www.imf.org/external/pubs/ft/survey/so/2010/CAR042410A.htm)

_Source: https://www.imf.org/en/blogs/articles/2010/04/29/asia-leading-the-global-recovery_