IMF Regional Economic Outlook Update on the Asia-Pacific is released

According to the October 2015 Asia and Pacific Regional Economic Outlook Update (REO Update), growth is moderating in Asia, but the region will continue to outperform the rest of the global economy. The growth will moderate slightly to 5.4 percent in 2015–16, in line with global developments. “Domestic consumption, supported by robust labor markets and lower energy prices, will be the main growth driver, and the recovery in advanced economies will provide further support,” said Changyong Rhee, Director of the IMF’s Asia and Pacific Department.
The report also notes that negative growth spillovers from China to the rest of the region are probably larger than previously anticipated, and exports continue to fall short of global growth. While the rebalancing in China’s import demand is one cause, a broad-based weakness in global import demand is also a major factor behind the trade slowdown in Asia.
Growth prospects within Asia will likely diverge once again, including among the largest economies. China’s economy will continue to rebalance toward domestic consumption and is expected to grow by 6.8 percent and 6.3 percent in 2015 and 2016, respectively.
In Japan, growth is projected to recover to 0.6 percent in 2015 and 1 percent in 2016, supported by a wage-driven recovery in consumption, as well as a modest improvement in investment and exports. Domestic demand should also benefit from lower oil and commodity prices and the Bank of Japan’s accommodative policies.
In India, the ongoing economic recovery is expected to be underpinned by lower oil prices and robust domestic demand, and GDP is expected to grow 7.3 percent in 2015, rising to 7.5 percent in 2016.
Growth in major ASEAN economies is projected to moderate in 2015–16, owing to a number of factors, including lower commodity prices (Indonesia and Malaysia), political uncertainty (Malaysia), and weaker growth in China.
Given the slowdown across most of the region, and the challenging global economic environment, the REO Update recommends policies to support demand while lowering vulnerabilities. Accommodative policies should be considered, particularly for countries that have policy space and where the decline in growth has a clear cyclical or temporary component.
The report recommends that structural reforms should remain a priority to bolster medium-term growth by facilitating investment and job creation, and helping to reduce near-term vulnerabilities. In China, reforms should continue to help rebalance the economy away from debt-fueled investment. This would include, among other moves, leveling the playing field between state-owned-enterprises (SOEs) and the private sector, and improving the management of local government finances.
Press-release at the official IMF web-site
Regional Economic Outlook Update: Asia and Pacific