SINGAPORE (ICIS)--The International Monetary Fund (IMF) said on Monday it expects economy in Asia to grow by 5.4% in 2014 and by 5.5% in 2015, but warned that a sharper-than-expected slowdown in China and a failure by Japan to boost its economy are two main internal risks to the region’s outlook.
This will be an improvement over the 5.3% growth posted in 2013, the IMF said in a report titled: “Regional Economic Outlook: Asia and Pacific”. (please see table from the IMF report below)
External demand in Asia is set to pick up alongside the recovery in advanced economies, and domestic demand is expected to remain solid across most of the region, it said.
In China, growth is expected to slowly decelerate to 7.5% this year and 7.3% in 2015 to a "more sustainable path", the IMF said.
“A sharper-than-envisaged slowdown in China - due to ﬁnancial sector vulnerabilities and the temporary cost of reforms along the transition toward a more sustainable growth path -would have signiﬁcant adverse regional spillovers,” the fund said.
“In Japan, there is a possibility that Abenomics-related measures could prove less effective in boosting growth than envisaged unless strongly supported by structural reforms,” it added.
The IMF projects Japan's economy to grow by 1.4% in 2014 before slowing to 1% next year.
Externally, a sudden or sharper-than-anticipated tightening of global ﬁnancial conditions remains a key downside risk for Asian economies, it said.
“Economies with weaker fundamentals would be the most affected, similar to what happened a year ago when market participants abruptly revised their expectations of US Federal Reserve tapering,” the IMF added.