SINGAPORE, May 6, 2009 (AFP) – The International Monetary Fund (IMF) on Wednesday sharply slashed its growth outlook for Asia, predicting a “long and severe recession” for the region’s wealthier but export-reliant economies.
The export-led model of economic growth “may not pay the same dividends as in the past” as households in advanced economies were now expected to be more careful about expenses in the face of the worldwide slowdown.
“The current crisis vividly illustrates that, far from having ‘decoupled’ from the global economy, Asia has experienced accelerator effects at work,” the IMF said.
“Despite governments’ efforts to invigorate domestic demand, the prospects of a recovery at this stage hinge critically on a rebound in global activity.”
Asia’s largest economy, Japan, is projected to shrink 6.2 percent this year, far worse than last year’s contraction of 0.6 percent.
The Japanese economy is expected to return to growth in 2010 with an expansion of 0.5 percent, the IMF said.
It meanwhile said growth in China was expected to be 6.5 percent this year and 7.5 percent in 2010, and forecast 4.5 percent growth in India for 2009 and 5.6 percent the following year.
Within Southeast Asia,