The Next Phase of Asia’s Economic Growth
IMF Blog, April 28, 2011
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- Authors: Anoop Singh
- Published: April 28, 2011
Economic outlook
- Economic growth averaged 8.3 percent across the region in 2010, driven by strong exports and domestic demand.
- Asian exports, especially of high-tech products, have benefitted from higher global investment.
- Domestic consumption and investment were supported by rising employment, abundant credit, and supportive macroeconomic policies.
- Growth is likely to remain robust, averaging 7 percent in both 2011 and 2012 (compared to 4.5 percent global growth).
- China and India will remain in the lead, and their growth will increasingly benefit other economies in the region.
- The economic spillovers from Japan are still unclear as events are unfolding, but early and decisive policy actions helped to limit the initial damage; impact is expected to remain limited provided that disruptions to the production and distribution network—the “supply chain”—are not protracted.
Near-term risks & policy choices
- Overall risks to Asia’s economic outlook are more balanced than six months earlier, reflecting receding financial risks in advanced economies.
- New downside risks identified:
- the potential for higher oil prices, particularly due to unrest in the Middle East, which could disrupt global growth and fuel inflation;
- overheating risks in many Asian economies in terms of both consumer price inflation and asset prices.
- Policy implications and current stance:
- The need to tighten macroeconomic policies in Asia has become more pressing now than it was a few months ago.
- The extent of tightening required varies across countries.
- Several countries have already begun to raise interest rates and reduce fiscal stimulus.
- Real policy rates are still negative in several regional economies, including China, Korea and India.
- Exchange rate appreciation can be a key defense against overheating pressures, as it would help tighten overall financial conditions, reducing the burden of adjustment on higher interest rates.
- Policymakers sometimes fear that tightening could attract volatile capital inflows, but such inflows have moderated in recent months, making the task of tightening easier.
The next phase — priorities for sustained growth
- Priority 1: Address persistent global imbalances and pre-crisis distortions to reinforce the sustainability of global growth prospects.
- In Asia, this implies moving ahead with policies to boost domestic demand.
- Specific policy actions highlighted: extending social safety nets and boosting infrastructure investment.
- Priority 2: Strengthen the social dimension of growth.
- Although labor market conditions in Asia are generally better than elsewhere, challenges include persistent poverty in some countries, high inequality, and youth unemployment.
- Promoting more inclusive growth will help make growth more durable.
Anoop Singh — April 28, 2011
Content in this bundle
- 下一阶段的亚洲经济增长, IMFdirect, 作者：Anoop Singh, 2011年4月28日
- アジアの経済成長・次の段階, iMFdirect, アヌープ・シン, 2011年4月28日
- 아시아 경제 성장의 다음 단계, IMFdirect, 작성: 아눕 싱, 2011년4월28일