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Asia growth to slow, but to remain fastest in world: IMF
12 Oct, 2012 08:01:27
Oct 12, 2012 (LBO) - The International Monetary Fund has downgraded Asia growth to 5.4 percent in 2012 from 6.0 percent with European troubles hurting export demand and domestic slowdowns in India and China.
Asian growth in the first half of 2012 was the lowest in 2008, the IMF said releasing its World Economic Outlook report for the Asia Pacific region.

India, which has experienced trouble due to foreign exchange interventions by the Central Bank which has sent the rupee tumbling is expected to grow 4.9 percent in 2012, down from a earlier expected 6.9 percent.

Sri Lanka would grow by 6.7 percent, down from an earlier forecast of 7.4 percent, Bangladesh 6.1 percent, up 0.2 from an earlier forecast.

China is expected to grow 7.8 percent down 0.4 percent with authorities trying to bring the country to a 'soft landing' following earlier stimulus which had fired a property bubble.

"Going forward, growth is projected to pick up very gradually, and Asia should remain the global growth leader, expanding over 2 percentage points faster than the world average next year," the IMF said releasing its

"However, considerable downside risks remain, in particular with regard to the euro area crisis."

A one percent slowdown in China would also reduce growth in neighbouring countries of Korea,Malaysia, and Taiwan Province of China where there are strong supply chain links,. by half percent, the IMF said.

In 2013 growth in Asia would be 5.9 percent, lower than the previously expected 6.6 percent.

China, is expected to grow 8.2 percent in 2013 and India's growth is expected to recover to 6.1 percent.

In 2013 Sri Lanka is expected to grow 6.7 percent, down from an earlier 7.0 percent forecast and Bangladesh 6.1 percent, down 0.3 percent.

"The priorities for policymakers are to support noninflationary growth, maintain financial stability, and remain responsive to weaker-than-expected outcomes," the IMF said.

"Refocusing structural and fiscal reform efforts toward sustained and more inclusive growth remains a priority."

Though inflation pressures seem to have eased, monetary policy seem to be more accommodative than is suggested by measures such as the Taylor rule, the monetary watchdog said.

Reserve country central banks such as the Fed and European Central Bank has been engaging in quantity easing (printing large volumes of money) in a bid to push credit, which can depreciate their currencies against traded commodities and fire inflation.

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