IMF downgrades growth forecast for Asia
The Washington-based International Monetary Fund (IMF) has downgraded its growth prospects for Asia amid the euro zone debt crisis and sluggish US growth.
The IMF is now forecasting growth for Asia of 6.3% in 2011 and 6.7% in 2012.
This is slightly lower than the 7% growth for both years it estimated in April.
According to the Fund, risks for Asia were “decidedly tilted to the downside” due to concerns over its two major export areas.
The IMF report said: “The panic sell-offs across Asian financial markets and safe-haven flows into Japan that occurred when European troubles intensified in August and September 2011 demonstrate that there is no place to hide when advanced markets come under pressure.”
Meanwhile, the IMF added that inflation remains high in a number of Asian countries.
Inflationary pressures are rife throughout the world, but particularly in Asia; Hong Kong’s inflation rate hit a 35-month high in July, driven by food prices and rising housing costs, while South Korea’s is at a three-year high. China’s inflation rate also remains above target.
Figures today revealed India’s wholesale price inflation eased to annual rate of 9.72% last month, down from August’s rate of 9.78%.
However, the rate is still significantly above the central bank’s target of between 4% and 5% and represented the tenth consecutive month that inflation has been above the 9% mark.
Many Asian central banks have opted to hike interest rates in a bid to combat high inflation, which is posing a serious risk to economic growth in some regions.