Despite economic growth in Asia moderating, the International Monetary Fund (IMF) has reported that the region will remain resilient, citing “domestic demand in China, limited financial spillovers, and the capacity of Asian banks to step in as European banks deleverage”, as factors that will enable the region to maintain its growth momentum.
In its latest World Economic Outlook report, the IMF maintained that Asia will sustain a high growth momentum, with the region expected to see economic growth of 6% in 2012 and 6.5% in 2013, as consumption and investment in China is predicted to remain robust.
While many countries in the West are grappling with the difficulty posed by weak financial institutions, Japan and developing Asia will be the least euro-exposed regions. In fact, Asia’s growth will remain higher than the growth average across all developing economies, which will be expected to slow from 6.25% in 2011 to 5.75% this year, before reaching 6% in 2013.
The IMF maintained that this year “the euro[zone] is projected [enter] a mild recession as a result of the sovereign debt crisis and a general loss of confidence, and the impact of fiscal consolidation in response to market pressures.”
Nonetheless, reconstruction efforts in Thailand and Japan this year, following 2011’s natural disasters in the countries, will be crucial factors that will continue to set Asia apart, as these developments will further boost the growth of the continent. Ending on an optimistic note, the IMF report stated: “[Global] growth [in 2013] could be better than projected if policies improve further, financial conditions continue to ease, and geopolitical tensions recede.”