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Hot Off the Press: The IMF's New Asia Forecasts

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Hot Off the Press: The IMF's New Asia Forecasts

by Cesar Bacani, 02 October 2009
topics:
Asia and the Global Economic Crisis Management
tags:
forecasts IMF International Monetary Fund. GDP growth World Economic Outlook

First, the good news. According to the latest World Economic Outlook report of the International Monetary Fund (IMF) released on October 1, the outlook for Asia’s economies has improved markedly in the first half of 2009. “The recent, swift turnaround of economic fortunes is remarkable,” says the IMF, given that Japan’s GDP, for example, contracted by more than 10% on an annualised basis in the two quarters after Lehman Brothers went under in September 2008.

 
But here’s the sobering news. “Questions remain about whether the rebound can become a self-sustaining recovery – ahead of a stronger growth pick-up in the rest of the world,” says the IMF. Asia’s CFOs, in other words, cannot afford to let down their guard. The cost-cutting and belt-tightening regime in most companies must remain in place while waiting for more clarity on the way forward for the region and the world.
 
At least, nowhere in the document does the IMF mention the dreaded phrase “double dip recession,” something that less inhibited commentators like Nouriel Roubini, William White and Andy Xie have not been shy of proclaiming. While such an outcome is certainly a possibility, particularly if governments withdraw fiscal stimulus spending too early, the IMF is clearly in the cautiously optimistic camp.
 
“A sustained turnaround [in Asia] is not assured,” the report concedes. But the agency is confident enough in the short term to say that “growth momentum will build during the second half of 2009, forming the basis for a generally moderate recovery in 2010, as external demand from advanced economies strengthens.” What happens in 2011 and beyond, however, is apparently too murky for projections to be made.
 
Baseline projections
The IMF’s moderate optimism on Asia is reflected in its growth projections for the region’s economies next year. It sees all Asia Pacific economies expanding in 2010, led by China at 9% and India at 6.4%. But the pain will continue for many countries this year. Hong Kong, Japan, Korea, Malaysia, New Zealand, Singapore, Taiwan and Thailand will see GDP shrink in 2009.
 

Real GDP in Asia, % change
 
                        2007    2008    2009f  2010f       
Australia            4.0       2.4       0.7       2.0
Bangladesh        6.3       6.0       5.4       5.4
China               13.0       9.0       8.5       9.0  
Hong Kong         6.4       2.4       (3.6)     3.5

India                  9.4       7.3       5.4       6.4
Indonesia           6.3       6.1       4.0       4.8
Japan                2.3       (0.7)     (5.4)     1.7
Korea                5.1       2.2       (1.0)     3.6        

Malaysia           6.2       4.6       (3.6)     2.5

New Zealand     3.2       0.2       (2.2)     2.2
Pakistan           5.6       2.0       2.0       3.0
Philippines        7.1       3.8       1.0       3.2  

Singapore          7.8       1.1       (3.3)     4.1
Taiwan              5.7       0.1       (4.1)     3.7
Thailand            4.9       2.6       (3.5)     3.7
Vietnam            8.5       6.2       4.6       5.3
 

 

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