The International Monetary Fund downgraded Asia’s growth outlook citing prolonged global policy uncertainty and slowing growth in China and India, and highlighted rising downside risks to growth.
According to the latest economic assessment for Asia and the Pacific, released Wednesday, Asia will grow only 5 percent this year instead of 5.4 percent projected earlier due to weak trade and investment. This would be the slowest expansion since the global financial crisis.
The projection for 2020 was trimmed to 5.1 percent from 5.4 percent forecast in April.
Chang Yong Rhee, director of the IMF’s Asia and Pacific department, said, “With Asia’s conjuncture at a delicate moment, policies will need to be supportive while safeguarding financial stability.”
The IMF said Asia’s near-term policy priorities should aim at preventing a sharp growth slowdown, while reducing vulnerabilities.
China that accounts for 39 percent of global growth is expected to expand 6.1 percent in 2019, and 5.8 percent in 2020. The outlook for 2019 was lowered from 6.3 percent and that for 2020 from 6.1 percent.
The lender observed that the gradual slowdown in China reflects the ongoing rebalancing of growth drivers and the adoption of new trade measures by the US and China.
In India, growth decelerated sharply in recent quarters but is forecast to strengthen from 6.1 percent in fiscal year 2019 to 7 percent in 2020, underpinned by monetary policy stimulus and corporate income tax reduction.
In April, the IMF had forecast India to grow 7.3 percent in 2019 and 7.5 percent in 2020.
Japan’s economy is projected to expand at a moderate pace of 0.9 percent in 2019 and 0.5 percent in 2020.
In the ASEAN-5 countries, the IMF observed that growth lost some momentum in the first half of 2019, due to weakening external demand. Looking ahead, growth is expected to stabilize around the mid-4 percent level.
Singapore is expected to grow only 0.5 percent this year and 1 percent in 2020.
South Korea’s growth is seen at 2 percent in 2019 and 2.2 percent in 2020. Both figures were 0.6 percentage point less than predicted in April.
Hong Kong’s growth is forecast to ease sharply to 0.3 percent in 2019 before improving to 1.5 percent next year. The projections were downgraded from 2.7 percent and 3 percent, respectively.