(EnergyAsia, May 3 2012, Thursday) — Asia’s economic growth  is expected to pick up this year after slowing in the last quarter of 2011, but its leaders must undertake the “difficult task of adjusting policies to support stable, non-inflationary growth”, said the International Monetary Finance (IMF).

At its regular outlook briefing for the region in Kuala Lumpur, Malaysia last week, IMF’s economists said Asia is expected to continue growing at around 6% this year, same as last year, and 6.5% in 2013.

“Policymakers should be ready to shift gears and renew tightening if overheating pressures become evident. Calibrating the right amount of insurance to support stable, non-inflationary growth is the main near-term policy challenge,” said Anoop Singh, head of the IMF’s Asia and Pacific Department.

Asia has continued to enjoy robust domestic demand against the background of the fragile global recovery. This has been reflected in low unemployment and robust credit growth in the region. Inflation expectations also picked up and so far, capital inflows into emerging Asia have rebounded in 2012.

The IMF expects Asia’s economic performance to show “considerable regional  variation.”

While emerging Asia, led by China and India, will remain the fastest growing region in the world expanding at 6.9% this year, it expects the industrialised countries of Japan, Australia and New Zealand to grow by only 2.2%.

The region faces the threat of further financial turmoil in Europe, higher energy prices and rising inflation.

Asia faces the risks of a sharp fall in exports and a reversal of foreign capital flows. The possibility of stabilisation of global economic and financial conditions over the course of 2012 would provide a boost to the whole region, but could also revive the threat of inflation.

The IMF expects inflation in Asia to decline modestly in 2012, averaging 3.5%, due partly to lower commodity prices.
asia outlook for strong growth but rising threats from eurozone energy prices and inflation says imf