economic prospects of emerging Asia, labelling the region “the most important engine of global growth” despite concerns over trade disputes and mounting debt.BEIJING, April 17 — The IMF said today it remains upbeat about the
The International Monetary Fund’s latest quarterly World Economic Outlook forecasts global growth of 3.9 per cent this year as the world economy hums along and nations retain supportive fiscal policies.
The fastest-paced expansion will remain concentrated in Asia, it predicts, where the buoyant economies of China, India and a host of South-east Asian nations will perform well above the global average.
The IMF left unchanged from January its growth estimate for China of 6.6 per cent for 2018 and 6.4 per cent in 2019. The country’s own 2018 target is around 6.5 per cent.
China reported today that its economy had grown 6.8 per cent in the first quarter, maintaining the same pace as the fourth quarter.
India is widely expected to be the next global growth juggernaut.
The IMF foresees the nation’s economy surging by 7.4 per cent this year and 7.8 per cent in 2019, also unchanged from its previous outlook in January.
The two Asian giants have seen their economic prospects brighten amid strong global demand for their exports and as their massive populations start spending, the IMF said.
Southeast Asia’s booming economies of Indonesia, Malaysia, the Philippines, Thailand and Vietnam will collectively maintain growth above five per cent this year and next, the fund said.
“Emerging Asia, which is forecast to continue growing at about 6.5 per cent during 2018–19, remains the most important engine of global growth,” the fund wrote.
Global trade jumped 4.9 per cent last year, the fund estimated, with China’s exporters being among the largest beneficiaries.
“Growing trade tensions and risks of a shift toward protectionist policies, and geopolitical strains” are among the greatest concerns, the fund said.
“An increase in tariffs and non-tariff trade barriers could harm market sentiment, disrupt global supply chains, and slow the spread of new technologies, reducing global productivity and investment,” the fund said.
Ballooning debt in both India and China has been a top concern for the IMF in recent years. Last year the fund said China’s credit growth was on a “dangerous trajectory”.
In India spiralling bad debt forced the government to recapitalise state-owned banks to the tune of US$32 billion in October to help them clean up their books.
Chinese policymakers have delayed cutting debt, instead allowing for “stable and rational debt rises” this year to maintain growth. The IMF said officials were “eroding valuable policy space” but applauded regulators’ efforts to rein in the riskiest portion of its lending known as shadow banking.
“Nevertheless, total credit growth remains high,” the IMF wrote.
In India public banks are saddled with bad loans, making it hard for them to continue to fund the economy.
The debt and credit quality problems at banks will “exert a drag on investment in India”, the IMF wrote. — AFP
Source: The Malay Mail Online