Asia needs more interest rate cuts, government aid in 2010 – IMF

06 May 2009 10:33  [Source: ICIS news]

SINGAPORE (ICIS news)--Asia will require further interest rate cuts and more government spending to recover next year as the region currently relies too heavily on falling exports, global financial stability watchdog the International Monetary Fund (IMF) said on Wednesday.

Asia would manage a 1.3% growth in GDP this year - a sharp deceleration from the 5.1% expansion recorded in 2008 - and 4.3% in 2010, based on the IMF’s Regional Economic Outlook report for Asia and the Pacific.

“Forceful countercyclical policies need to be sustained to help Asia come out of the recession more quickly and vigorously, and to provide insurance against downside risks,” the report said.

The multilateral institution also reiterated Asia’s need to shift away from relying too much on exports as an economic growth engine.

“Asia’s growth path will continue to run parallel to the global economy,” the IMF said.

A “tepid recovery” was in store for the region not only because the global economy would remain weak but also on expectations that investments would be slow to pick up after a severe downturn, it added.

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By: Pearl Bantillo
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