Asia faces a significant growth slowdown, with forecasts for 2019 and 2020 calling for the “slowest growth pace after the global financial crisis,” according to the International Monetary Fund.
“Growth softened in the first half of 2019, driven by a large decline in fixed investment and exports. Looking ahead, Asia is expected to grow at 5.0 percent in 2019 and 5.1 percent in 2020, which is the slowest growth pace after the global financial crisis. Meanwhile, inflation across Asia is projected to remain subdued, reflecting softening demand,” said Changyong Rhee, Director of the Asia and Pacific Department of the IMF in a briefing on Friday on the Asia and Pacific regional Outlook.
The IMF says China’s lowered growth estimates are having an impact on the whole region.
“The Q3 GDP numbers for China came out and they showed that growth had slowed to 6.0 percent in the third quarter, down from 6.2 percent in the second quarter, which is broadly in line with our WEO baseline forecast. In this year’s WEO, we forecast China’s growth to slow modestly to 6.1 percent this year, 5.8 percent next year. This growth slowdown reflects several factors, including the escalation of trade tensions, the global slowdown in manufacturing and investment, but also the strengthening of financial regulations in China, which has helped keep growth on a sustainable path,” said Kenneth Kang, Deputy Director of the Asia and Pacific Department.
India’s slowdown of recent quarters is improving, said Rhee.
“We believe India still has a limited fiscal space, so they have to be careful. We actually think they are, we support their corporate income tax cut because it has a positive impact on investment. But, on the other hand, India has to address continued fiscal consolidation and secure the long-term stability of their fiscal conditions,”said Rhee.
And reinforcing the IMF’s focus on climate change, Rhee noted that Asia is especially vulnerable to climate change-linked weather events and needs to take action.
“Asia is definitely the most vulnerable region for climate change. And then also, climate change is not just a global issue. In many countries we are facing the quality of life really deteriorating. China, air quality isn’t easy to improve. Big questions. If you look at many infrastructures – flood in Thailand whenever the rain comes, all the traffic conditions. Even an advanced economy like Japan, we are not very safe. So, there is an immediate need for each country to address this issue. Third, also, historically it’s not our fault but at this moment it’s true we cannot deny that the largest emissions are coming from Asia,” he said.