Asian economies and currencies forecast 2012

Indonesia stock info - Asian economies and currencies forecast 2012 ; The International Monetary Fund cut its growth forecasts for Asian economies in a report released Tuesday, and said stronger currencies are needed to keep inflation under wraps.

The IMF now projects 8.2% gross-domestic-product growth this year and 8% growth in 2012 for emerging Asian economies, versus a June forecast for the region of 8.4% for both 2011 and 2012. The measure includes the South Asian subcontinent and excludes Japan and the "newly industrialized economies" of Hong Kong, Singapore, South Korea and Taiwan.

Those four are predicted to grow at a slower 4.7%, versus 5.1% projected in June, and tailing off from 8.4% growth last year.

In its twice-yearly World Economic Outlook survey, the multilateral lender cut China's 2012 growth estimate by 0.5 percentage point to 9.0%, reflecting weaker demand from developed economies for Chinese goods.

Asian economies across the region are cooling from a torrid pace of growth in 2010, as they rebounded from the effects of the global economic crisis. That cooling is in part policy-driven, as central banks have tightened to prevent overheating, and in part due to deteriorating economic conditions in the West, the top destination for many Asian exports.

Despite the lower forecast, developing countries in Asia are still seen outpacing the rest of the developing world. The IMF predicts 6.4% growth for all emerging economies in 2011. Advanced economies are estimated to grow by an anemic 1.6%.

The IMF said most Asian countries should keep a close eye on inflation, and those with large current account surpluses should let their currencies appreciate faster as one means of combating price pressures. Inflation will reach 7.0% in developing Asia this year, before tailing off to 5.1% in 2012, the IMF projected.

It singled out China and Korea as countries with large, external surpluses where real effective exchange rates remain below their levels prior to the 2008 crisis.

"For these economies, a stronger exchange rate, combined with structural reforms, would raise domestic purchasing power and allow external rebalancing, while also containing inflation pressure," according to the IMF report.

Asian economies could also bolster domestic demand by increasing public spending on infrastructure, and most have the fiscal headroom to do so, including Indonesia, Korea and Malaysia, the IMF said.

For Japan, the IMF lowered its 2012 growth forecast to 2.3%, down 0.6 percentage point from the previous forecast in June. The figure is roughly in line with Japan's own forecast, which expects growth of 2.4% for the fiscal year beginning April 2012, according to figures from a government-affiliated research group.

Spending for earthquake and tsunami reconstruction is expected to help boost growth.

The IMF also repeated its calls for Japan to get aggressive on debt reduction, as the country nears a debt-GDP ratio of 200%, by far the highest among major economies. A proposal to double the national consumption tax to 10% is a good first step but further action would be necessary, the IMF said.

The IMF forecast India's economy to grow by 7.8% in 2011, down from its June estimate of 8.2%. The cut is due to a slowdown in investment reflecting, in part, recent corporate sector governance problems and the drag of global uncertainty.

Hong Kong economies and currencies forecast 2012 , Singapore economies and currencies forecast 2012, South Korea economies and currencies forecast 2012, Taiwan economies and currencies forecast 2012.


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