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Bangkok
06 May 2009
The International Monetary Fund says many Asian economies are to
continue to tumble this year and will take some time to recover from
the global economic slow-down. The IMF says Asian governments should
sustain economic stimulus policies and encourage more domestic
consumption.
The new IMF report on the economic outlook for the
Asia and the Pacific says the region will take longer than other parts
of the world to recover from the global slow-down.
The Washington-based organization says Japan is expected this year to experience its worst recession on record.
The economies of Korea, Hong Kong, Taiwan, New Zealand and Australia are also expected to shrink.
In
Southeast Asia, the International Monetary Fund says Singapore,
Malaysia and Thailand will contract while the Philippines will record
zero growth.
"Accordingly, we forecast that Asia's growth will
decelerate to just 1.3 percent this year before rebounding to 4.2
percent in 2010, still well below the region's potential and the 5.1
percent rate recorded in 2008," said Kalpana Kochhar, deputy director
of the IMF's Asia and Pacific Department.
On the positive side, China, India, Indonesia and Vietnam are expected to slow down this year, but still grow their economies.
The
IMF says most Asian economies, with the exceptions of Singapore and
Taiwan, are expected to grow next year as exports begin to revive.
But, Kochhar says that also depends on Asian governments continuing to stimulate their economies.
"Fiscal
stimulus provided in 2009 will need to be sustained into next year.
And, in many cases there is also scope for reducing interest rates
further or even adopting unconventional monetary policies as in the
advanced countries," said Kochhar.
Kochhar adds that Asian
countries also need to maintain their foreign exchange liquidity
through currency swaps or assistance from organizations like the
International Monetary Fund.
Most Asian economies worst hit by the global slow-down rely on manufacturing for export as a major growth engine.
But the lack of credit in developed countries has led to what the IMF calls a "collapse in the demand" for Asian exports.
The
IMF says between September 2008 and February this year, merchandise
exports in emerging Asian economies fell at an annualized rate of about
70 percent - almost three times the drop experienced during the late
1990s Asian financial crisis.
In the long run, the International
Monetary Fund says, Asian economies will need to change their structure
to rely less on exports, since consumption in advanced countries may
remain weak for years to come.
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