The IMF yesterday raised its forecast for Asian economies this year, but warned that “downside risks” had intensified for the region following financial turmoil in the eurozone area.
The Chinese economy should expand 10.5 percent following a strong rebound in exports and resilient domestic demand, the fund said, revising upwards its April forecast of 10 percent.
India’s growth this year was revised higher to 9.4 percent from 8.8 percent as robust corporate profits and favorable financing conditions fuel investment.
PHOTO: REUTERS
With the upward revisions for the world’s two most populous countries, GDP growth for the whole of Asia this year was revised up to 7.5 percent from 7 percent in April.
For next year, however, when stimulus programs are expected to be withdrawn in several countries, Asia’s growth is expected to settle to “a more moderate but also more sustainable rate” of 6.8 percent, the IMF said in a report.
It said China’s growth could slow to about 9.6 percent next year, as further measures are taken to slow credit growth and maintain financial stability.
IMF economic counselor Olivier Blanchard told a press conference in Hong Kong that China was moving in the right direction by encouraging domestic consumption and allowing greater latitude for its currency.
“China’s decision to boost internal demand and allow more flexibility for the yuan is very welcome,” he said. “Its shift from investment to domestic consumption is very desirable.”
Jose Vinals, the fund’s financial counselor, said China’s forecast slower growth next year was mainly due to a general slowdown in the macroeconomic environment.
The fund expects India’s growth to slow to 8.4 percent next year.
In Japan, growth is now expected to reach 2.4 percent this year because of stronger-than-expected exports during the first half, before easing to about 1.8 percent next year as fiscal stimulus gradually tapers off.
The five key Southeast Asian economies of Indonesia, Malaysia, the Philippines, Thailand and Vietnam are likely to grow by an average of 6.4 percent this year and 5.5 percent next year.
Following warnings by the fund earlier this year about the formation of asset bubbles in Asia, such problems in the market had eased, Vinals said.
But the IMF warned that any stalling in the European recovery could affect Asia through both trade and financial channels, even though the region has only limited direct financial linkages to the most vulnerable eurozone economies.
“Many Asian economies [especially the newly industrialized economies and ASEAN economies] are highly dependent on external demand, and their export exposure to Europe is at least as large as their export exposure to the United States,” the report said.
However, in the event of “external demand shocks,” large economies such as China, India and Indonesia could provide a cushion to growth, it said.
The report said that significant contagion effects from a Europe-wide credit problem could hit bank funding and corporate financing, especially in those regional economies more dependent on foreign currency financing.
However, in the event of such contagion, Asian central banks could swiftly redeploy tested instruments, such as a US dollar liquidity swap facility, to overcome market seizures.
“Many regional economies also have room for further policy maneuver and could delay the planned withdrawal of monetary and fiscal stimulus in order to mitigate adverse spillovers to the real economy,” it said.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique