I am in Asia this week to launch our October 2010 Regional Economic Outlook: Asia and Pacific (REO) in Jakarta and Singapore. As I have inevitably found during visits to Asia over so many years, the mood here is confident about future economic prospects. Yet it is also watchful for risks that may be lurking over the horizon. This mood matches closely the main messages of our current assessment of the outlook for the region.
Asia’s leadership of the global economic recovery is continuing unabated. And, even though heightened risks mean there may be tough times ahead again, the region is well equipped to handle them.
Asia’s remarkably fast recovery from the global financial crisis continued in the first half of 2010, despite the recent tensions in global financial markets. In fact, GDP growth in the first quarter was generally stronger than we anticipated in our Regional Economic Outlook in April. And high-frequency indicators suggest that Asian economic activity remained brisk in the second quarter. Even more notable, this is true both for economies that escaped a recession in 2009, thanks to their relatively larger domestic demand bases (China, Indonesia, and India), and for the more export-oriented economies such as Japan, the Newly Industrialized Economies (NIEs), and the rest of the ASEAN.
Two growth engines
As I have highlighted in previous posts, Asia has been leading the global recovery and it is expected to continue doing so in the near term.
Not only has Asia’s rapid growth helped output return to pre-crisis levels relatively quickly, it has attracted large capital inflows into the region. Foreign capital has poured in, attracted by Asia’s strong fundamentals and bright growth prospects. Portfolio and cross border banking flows have rebounded sharply as financial conditions normalized.
I blogged last from China, and this week I am in India to present our latest Asia-Pacific Regional Economic Outlook in New Delhi. India is of course, along with China and some other countries, an important driver of the Asian recovery. And Asia in turn is leading the global recovery.
I am in China this week to present our new Asia-Pacific Regional Economic Outlook in Shanghai. I remain as impressed as ever by China’s energy and vibrant growth, an impression that is reinforced every time I return to this country.
Like geese flying in formation, the successive waves of Asian countries achieving economic takeoff and emerging or developed market status, has been likened to those migratory birds in flight. If this model is accurate, more Asian geese are set to join the flock of economically successful nations.
As Asia starts down the path to recovery, it is going to have to tackle two issues which are constraining its long-term growth potential: firms that save but do not invest and wealthy households that are reluctant to consume. At first glance, such behavior seems inexplicable and counter-intuitive. Let’s imagine for a moment you are […]
Now here’s the puzzle: how is it that Asia has rebounded sooner and more strongly than the rest of the globe from the economic slump when the region is so heavily dependent on exports for its growth? This, and the future prospects for the region, are two of the key issues we analyzed in the […]
During our recent Spring Meetings, we launched the IMF’s Regional Economic Outlook for the Western Hemisphere. The report focuses on the outlook for Latin America and the Caribbean (LAC) in the face of the downturn now projected for the U.S. economy and the continuing risks that affect the global outlook. I thought it would be […]