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India, China hit; Asia to slow down: IMF
Now, with the effects of the financial crisis engulfing the emerging markets of India and China, growth in Asia is expected to slow sharply in 2009, according to the International Monetary Fund (IMF) latest forecast. “Growth in Asia is expected to slow substantially along with the rest of the world, as exports weaken and spillovers from the global financial turmoil weigh on domestic activity.”
Annually, growth in Asia is expected to slow from 7.6 percent in 2007 to 6.0 percent this year and 4.9 in 2009. “Emerging Asia” including China, India, Hong Kong, South Korea, Singapore, Taiwan, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam are anticipating a slow down from 9.5 percent in 2007 to 7.7 percent this year and 6.5 percent in 2009. Also with India’s expected slow down from 9.3 percent in 2007 to 7.8 this year and 6.3 in 2009, emerging Asia’s growth would drop even further, so from 5.9 percent to 4.6 to 3.1 percent during the same time span.
One reason given for the slowdown was that the global demand for Asia’s exports is diminishing, with the economies of the euro area, Japan, and the United States in a deep slump as well as indicators pointing to a sharper decline ahead. The financial environment has become very challenging. There are tighter financing conditions, capital outflows, depressed equity prices, a weakening of a number of regional currencies, and higher sovereign and bank spreads.
Asia sees recovery beginning in the second half of 2009, but they say the
risks are much larger than usual and point to the downside.
However, India remains confident that the long-term outlook for India’s economy remains strong and robust due to their inherent strength, large size of market, and diversified industrial base. They see this as a window of opportunity to that will make them a strong and dynamic private sector that will eventually allow them to return to a 9 percent growth trajectory.
