West's crises mean Asia has worse IMF growth forecast
By Danny McCord, AFP
October 10, 2012, 12:30 am TWN
HONG KONG--The IMF on Tuesday cut its growth forecasts for developing Asia, blaming a slowdown in Europe and the United States, and warned that China's attempts to boost its economy had not taken hold.
It also cut the outlook on Japan, saying disaster reconstruction spending would tail off and lead to weaker growth next year.
The International Monetary Fund's World Economic Outlook comes at the beginning of a week that will see it and the World Bank hold their annual meetings in Japan, ahead of a meeting of the Group of Seven.
It also reinforces concerns expressed by the World Bank on Monday and Asian Development Bank last week as they cut their regional forecasts, citing global weaknesses.
The IMF said growth for developing Asia would come in at 6.7 percent this year and 7.2 percent in 2013. That compares with July's estimate of 7.1 percent this year and 7.5 percent next year.
“Compared with the region's growth performance in recent years, the near- and medium-term outlooks are less buoyant,” the report said.
“This view reflects weaker anticipated external demand resulting from the tepid growth prospects in major advanced economies and a downshift in China's and India's growth prospects.”
It warned that a worsening of the eurozone debt crisis and a failure by U.S. lawmakers to avert a possible “fiscal cliff” could fuel problems.
China's economy, a key driver of regional growth, will see just 7.8 percent expansion this year, the IMF warned, but 8.2 percent next year as easing measures kick in.
Both figures are lower than the July forecasts of 8 percent and 8.5 percent.
“Slowing growth in China has affected activity in the rest of Asia, a consequence of the deepening of linkages throughout the region in the past decade,” it said.
It warned “a return to double-digit growth in China (is) unlikely” as the country's leaders try to shift from an export-driven economy to one balanced with domestic demand.
The numbers are well down from the 9.3 percent surge in 2011 and 10.4 percent in 2010.
Beijing has tried to spur growth by slashing interest rates twice this year and cutting the amount of funds banks must keep in reserve.