Asian economy unlikely to pick up in H2; 5.4% growth expected - IMF

12 October 2012 08:46  [Source: ICIS news]

SINGAPORE (ICIS)--Asia’s economy is unlikely to pick up in the second half of 2012, amid lingering worries about the crisis in the EU, the International Monetary Fund (IMF) said on Friday.

Economic growth fell to its lowest rate since the 2008 global financial crisis during the first half of the year, IMF said.

Asia’s economy is projected to expand by 5.4% in 2012, about 0.6 percentage points below a forecast made earlier in April, the IMF said in its Asia and Pacific Regional Economic Outlook report.

Asia’s real GDP growth averaged 5.5% on a year-on-year basis in the first half of this year, well above the global average, it said.

The IMF defines Asia as east Asia, south Asia and southeast Asia as well as Australia, New Zealand and Japan.

The region’s economy is expected to grow by 5.9% in 2013, 0.7 percentage points below a previous forecast made in April, but noted that there is a one-seventh chance that Asia’s economic growth would drop below 4%, it said.

"Growth is projected to pick up very gradually, and Asia should remain the global growth leader, expanding over two percentage points faster than the world average next year," the IMF said.

“However, considerable downside risks remain, in particular with regard to the euro area crisis,” it added.

About two-thirds of emerging Asia’s exports on a value-added basis is linked to demand from the EU and the US alone, the IMF said.

“Therefore, trade-channel effects, including through the second-round impact of lower investment and employment in export-oriented sectors, would exert a powerful downward drag on Asia’s most open economies in the event of a severe global slowdown resulting from a further escalation of the euro area crisis or a fiscal shock in the US,” it added.

By: Nurluqman Suratman

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