By Andualem Sisay Gessesse – Washington DC, USA – On the sidelines of the Spring meetings of the International Monetary Fund (IMF)/World Bank (WB) taking place in Washington DC, Krishna Srinivasan, Director, Asia and Pacific Department, IMF, who reflected on the regional economic outlook for Asia and Pacific, stated that Asia grows by 4.5% in 2024.
“Growth surprised on the upside in the second half of 2023, as robust domestic demand fueled activity especially in emerging Asian economies. Malaysia, the Philippines, Vietnam, and, most notably, India recorded sizeable positive growth surprises,” he said.
“Growth for the region reached 5.0 percent in 2023—much stronger than the growth of 3.9 percent in 2022—and is 0.4 percentage points higher than what we had projected in the October 2023 Regional Economic Outlook.”
He also stated that the momentum carries over into 2024. We now project the region to grow by 4.5 percent in 2024—an upward revision of 0.3 percentage points relative to October. With this, Asia would contribute about 60 percent of global growth. The region is projected to grow by 4.3 percent in 2025.
“Asia contributes 60% of the global growth this year,” he said. China’s economy is critical for the region…There are large disparities within the region. For example, in Australia New Zealand inflation is above target, while in China inflation is low. Meanwhile in general productivity is declining across Asia,” he said.
Intraregional growth is very important for the region…1% growth to China’s economy will have 0.3% effect on the growth of the region in general. The Japanese yen has depreciated by 0.9 percent against U.S. dollar this year like many currencies in the region …
Revenue mobilization will be key to maintain growth of the region, according to Srinivasan. Asian countries need to address domestic inflation pressures instead of reacting to the U.S. Federal Reserve’s measures.
China needs policies to address the property sector (the real estate). In China domestic demand is rising and the country needs policies that meets this growing domestic demand, according to Srinivasan. State Owned Enterprises (SOEs) reform is also needed in China.
When it comes to the other largest economy in the region, India is one of the fastest growing countries in the world with expected growth of 6.8% in 2024. Inflation is coming down to around 4 percent …Mr. Srinivasan stated that volatility in Global commodity prices such as oil is also a challenge for India to sustain this growth. for the growth of India.
Growth Drivers
– In China and India, we expect investment to contribute disproportionately to growth—much of it public, especially in India.
– In Emerging Asia outside China and India, robust private consumption will remain the main growth engine.
– In some advanced economies, such as Korea, we expect a positive impulse from exports—driven in part by strong global demand for high-end semiconductors. Domestic demand would strengthen only gradually.
It is stated that IMF’s regional economic outlook for Asia will be launched this month on April 30th in Singapore.