The IMF yesterday cut its growth forecasts for developing Asia, blaming a slowdown in Europe and the US, and warned that China’s attempts to boost its economy had not taken hold.
It also scaled back its forecast for Japan, saying disaster reconstruction spending would tail off and lead to weaker growth next year.
The IMF’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. The G7 also meets this week.
Photo: EPA
It also reinforces concerns expressed by the World Bank on Monday and the Asian Development Bank (ADB) last week as they cut their own 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 next year. 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 said.
It warned that a worsening of the eurozone debt crisis and failure by US 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 said, 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 said “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 last year and 10.4 percent in 2010.
Japan is tipped to see 2.2 percent growth this year thanks to spending on post-tsunami work, but that would ease to 1.2 percent next year.
In July, the IMF forecast growth of 2.4 percent for this year and 1.5 percent next year.
India is seen growing 4.9 percent this year and 6 percent next, with the IMF blaming “stalled investment caused by governance issues and red tape, and a deterioration in business sentiment” as well as a weakening rupee.
However, IMF chief economist Olivier Blanchard told reporters in Tokyo yesterday he did not see China and India suffering a hard landing.
“Indeed we see positive policy measures being taken ... but they suggest lower growth for some time, lower than we have seen in the recent past,” he said.
Blanchard said efforts to cut deficits were clearly needed, but added: “This is a marathon not a sprint.”
On Monday the World Bank slashed its growth forecast for developing countries in East Asia and the Pacific to 7.2 percent this year, dragged down by what it said would be China’s worst performance for 13 years.
The ADB on Wednesday last week reduced its estimate for Asia’s emerging economies to the lowest level since 2009, while also warning of significant risks from problems in Europe and the US.
Slowing exports were also blamed by the IMF for weaker growth in three of Southeast Asia’s five biggest developing economies — Indonesia, Thailand, Malaysia, the Philippines and Vietnam.
The report said only the Philippines and Thailand would see improvement this year compared with last year, with the latter boosted by reconstruction and investment after devastating floods hit the country’s north.
However, overall the five would enjoy growth of 5.4 percent this year and 5.8 percent next year. Last year saw growth of 4.5 percent.
WASHINGTON’S INCENTIVES: The CHIPS Act set aside US$39 billion in direct grants to persuade the world’s top semiconductor companies to make chips on US soil The US plans to award more than US$6 billion to Samsung Electronics Co, helping the chipmaker expand beyond a project in Texas it has already announced, people familiar with the matter said. The money from the 2022 CHIPS and Science Act would be one of several major awards that the US Department of Commerce is expected to announce in the coming weeks, including a grant of more than US$5 billion to Samsung’s rival, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), people familiar with the plans said. The people spoke on condition of anonymity in advance of the official announcements. The federal funding for
HIGH DEMAND: The firm has strong capabilities of providing key components including liquid cooling technology needed for AI servers, chairman Young Liu said Hon Hai Precision Industry Co (鴻海精密) yesterday revised its revenue outlook for this year to “significant” growth from a “neutral” view forecast five months ago, due to strong demand for artificial intelligence (AI) servers from cloud service providers. Hon Hai, a major assembler of iPhones that is also known as Foxconn, expects AI server revenues to soar more than 40 percent annually this year, chairman Young Liu (劉揚偉) told investors. The robust growth would uplift revenue contribution from AI servers to 40 percent of the company’s overall server revenue this year, from 30 percent last year, Liu said. In the three-year period
LONG HAUL: Largan Energy Materials’ TNO-based lithium-ion batteries are expected to charge in five minutes and last about 20 years, far surpassing conventional technology Largan Precision Co (大立光) has formed a joint venture with the Industrial Technology Research Institute (ITRI, 工研院) to produce fast-charging, long-life lithium-ion batteries for electric vehicles, mobile electronics and electric storage units, the camera lens supplier for Apple Inc’s iPhones said yesterday. Largan Energy Materials Co (萬溢能源材料), established in January, is developing high-energy, fast-charging, long-life lithium-ion batteries using titanium niobium oxide (TNO) anodes, it said. TNO-based batteries can be fully charged in five minutes and have a lifespan of 20 years, a major advantage over the two to four hours of charging time needed for conventional graphite-anode-based batteries, Largan said in a
Taiwan is one of the first countries to benefit from the artificial intelligence (AI) boom, but because that is largely down to a single company it also represents a risk, former Google Taiwan managing director Chien Lee-feng (簡立峰) said at an AI forum in Taipei yesterday. Speaking at the forum on how generative AI can generate possibilities for all walks of life, Chien said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) — currently among the world’s 10 most-valuable companies due to continued optimism about AI — ensures Taiwan is one of the economies to benefit most from AI. “This is because AI is