IMF: Asia Continues to Be the Engine of Global Economic Growth
The International Monetary Fund (IMF) assesses that the Asian region is still the world's most dynamic region in terms of economic growth. The IMF expects that Asia's economic growth will accelerate to 5.4 percent in 2014 despite the ongoing US Federal Reserve tapering of asset purchases. However, the IMF continued to stress the need for further structural reforms in Asia in an attempt to avert the negative impact of US tapering and future interest rate hikes. In 2013, the Asian region grew 5.2 percent.
Rhee Chang Yong, Director of the IMF's Asia Pacific branch, said that Asia remains a dynamic economic force as external demand from advanced markets is increasing amid an improving global economy. Meanwhile, internal domestic demand in Asia will remain robust as well. Next year, economic growth in Asia is projected at 5.5 percent.
However, Rhee Chang Yong also sees two risks (apart from the US tapering issue) that need to be faced by Asia. These risks are slowing economic growth in China and the sluggish economy of Japan. Regarding Japan, the IMF doubts that the Abenomics-policies will be sufficient to boost the sluggish economy, if not supported by structural reforms. The IMF forecasts that China's economy will grow 7.5 percent in 2014 and 7.3 percent in 2015. The Japanese economy is expected to expand by 1.4 percent this year and 1.0 percent next year.
Structural reforms are also required in other Asian countries in order to safeguard economies from capital outflows as interests rates are raised in advanced economies.