IMF sees mixed Asian outlook for 2013; lowers China forecast
BEIJING—The IMF painted a mixed picture for Asia’s top economies on Tuesday, trimming its Chinese growth forecasts but predicting Japan’s fiscal stimulus will help end years of stagnation and Indian growth will accelerate.
For the region as a whole, it predicted growth will “pick up modestly” to about 5.75 percent this year, boosted in part by a recovery in demand from outside the region and firm consumption and private investment within.
But the IMF’s World Economic Outlook also cautioned that possible dangers inside and outside the region could upset the positive scenario.
“The potential impact of external risks on Asia remains considerable,” the report said. “In the event of a severe global slowdown, falling external demand would exert a powerful drag on Asia’s most open economies.”
It cited financial imbalances and rising asset prices as risk factors and also warned of potential “disruptions to trade from territorial disputes,” an apparent reference to ongoing rows China has with Japan and some Southeast Asian nations over maritime claims.
For China, Asia’s largest economy, the Washington-based International Monetary Fund lowered its growth forecast for this year to 8.0 percent, a day after Beijing announced a shock downturn in the first quarter.
The IMF cut its prediction for growth in China, Asia’s largest economy, from the 8.2 percent it had given in January.
It did not give a reason for the reduction, but said expansion would pick up slightly from last year’s actual 7.8 percent, citing “continued robust domestic demand in both consumption and investment and renewed external demand.”
On Monday China announced that economic growth slowed to a surprisingly weak 7.7 percent in the first three months of this year, well below forecasts and fueling fears a recent pick-up is faltering.
Beijing’s January-March figure compared with a median 8.0 percent forecast in a poll of economists by AFP and marked a slowdown from 7.9 percent in the previous quarter.
China’s 2012 economic growth of 7.8 percent was its slowest in 13 years amid weakness domestically and in overseas markets. Authorities last month kept their growth target for this year unchanged at a conservative 7.5 percent.
The fund also cut its forecast for China’s growth in 2014 from 8.5 percent to 8.2 percent.
Earlier Tuesday ratings agency Moody’s cut China’s credit outlook to stable from positive, citing concerns on the country’s opaque local government debt, fast bank lending growth and stalled economic reforms.
The IMF was more optimistic about Japan, tipping its economy to grow 1.6 percent in 2013 and 1.4 percent in 2014, up from its January forecast of 0.4 percent and 0.7 percent.
It also said consumer prices will edge up 0.1 percent on-year in 2013, but rocket 3.0 percent in 2014, against 0.0 percent in 2012, thanks to the Bank of Japan’s fresh monetary easing announced this month.
“After many years of deflation, and little or no growth, the new government has announced a new policy, based on aggressive quantitative easing, a positive inflation target, fiscal stimulus, and structural reforms,” the IMF said.
“This policy will boost growth in the short term” and that is reflected in the IMF’s latest forecasts, it said.
While it welcomed the BoJ’s new monetary easing framework it added “easing must be accompanied by ambitious growth and fiscal reforms to ensure a sustainable recovery and reduce fiscal risks.”
In India, Asia’s third-largest economy, the IMF said growth will accelerate from 4 percent last year to 5.75 percent in 2013 and 6.2 percent the next year, thanks to stronger external demand and recent “pro-growth measures.”
“External demand, solid consumption, a better monsoon season, and policy improvements are expected to lift activity in India,” the report said.
The IMF said growth in Southeast Asia’s five biggest developing countries—Indonesia, the Philippines, Thailand, Vietnam and Malaysia—is projected at 5.9 percent this year, slightly down from 6.1 percent in 2012.