The International Monetary Fund says that while Asia remains the world’s fastest-growing region, it is set to record its weakest expansion in 2019 since the global financial crisis a decade ago. ― Reuters pic
SINGAPORE, Oct 24 — The International Monetary Fund (IMF) expects Asian economies to grow at five per cent this year — the slowest expansion since the global financial crisis a decade ago — and predicts that the subdued conditions will continue into 2020.
This is a downgrade from the IMF’s 2019 estimate of 5.4 per cent in April. It noted that the outlook has deteriorated noticeably since April amid weaker global trade, owing to the trade war between the United States and China and other headwinds.
In its October 2019 World Economic Outlook report released yesterday, the global body also slashed growth forecasts for several Asian economies, including Singapore, Hong Kong and China, from its April report.
Growth forecasts cut
IMF October growth outlook for 2019 for advanced economies, compared to April estimates
IMF October growth outlook for 2019 for emerging economies, compared to April estimates
The gloomy outlook extends to 2020, where IMF also cut its growth forecast for several Asian economies.
In its October report, the IMF stated that “some of the biggest downward revisions for growth are for advanced economies in Asia a common factor being their exposure to slowing growth in China and spillovers from the US-China trade tensions”.
For 2020, the IMF expects Asian economies to grow 5.1 per cent, down from 5.4 per cent in its April projections.
IMF also downgraded global growth forecasts, with the world economy expected to grow at three per cent in 2019, and 3.4 per cent in 2020. This was cut from the April estimates of 3.3 per cent growth for 2019, and 3.6 per cent growth for 2020.
Reasons for the downgrade
Although Asia is still the world’s fastest-growing region, contributing more than two-thirds of global growth, the IMF said that “near-term prospects have deteriorated noticeably” since its April assessment, with “risks skewed to the downside,” in an accompanying Regional Economic Outlook report, focused on the Asia-Pacific region.
Growth in Asia slowed in the first half of 2019 due to:
The IMF expects growth in Asia to continue to slow down.
Future risks to the region would include:
What can governments do?
The IMF said there is a “need for policies aimed at buffering the slowdown where necessary, strengthening resilience to growing downside risks, and raising inclusive medium-term growth”.