ASIATODAY.ID, JAKARTA – The International Monetary Fund (IMF) has raised its projection for economic growth in the Asian region in 2024 to 4.5% from 4.2% in the previous projection for October 2023.
Even so, this year’s growth is still lower than the estimated economic growth in 2023 which is estimated at 4.7%, up from 4.6% in October.
IMF Asia and Pacific Department Director Krishna Srinivasan said most of the projected increase was contributed by China and India. In China, growth was supported by higher spending on reconstruction and disaster resilience projects.
“In India, strong domestic demand strong domestic demand supports another increase in our growth forecast,” explained Srinivasan in the Regional Economic Outlook report conference on Wednesday, January 31, 2024.
On the other hand, the IMF estimates that the Asian economy in 2025 will slow slightly to 4.3%, which largely reflects China’s slowing growth.
The IMF also projects average Asian inflation to decline from 3.8% in 2022 to 2.6% in 2023.
He assesses that Many regional central banks are on track to achieve their inflation targets in 2024. Global inflation is projected to be 5.8% in 2024 and 4.4% in 2025. Core inflation is on a downward trend.
It is known that the United States (US) central bank has now hinted at a future reduction in interest rates. According to him, there is a risk that policy differences between the US and Asia will trigger sharp exchange rate movements in 2024.
“If so, central banks should avoid distractions from temporary volatility and remain focused on price stability,” he explained.
Although the outlook is also considered to have improved, Srinivasan said there is a risk of a larger and more protracted correction in China’s property sector. This could reduce domestic demand, especially if accompanied by pressure on local government finances. Demand from exporters may also slow down.
Then, on the positive side, stronger-than-expected policy support in China could boost domestic demand. This can produce a positive impact.
Apart from that, he also said that there was a risk of volatile financial conditions and an increasing risk of severe geopolitical fragmentation for Asia, considering the region’s integration into global trade.
Considering these risks, Srinivasan suggested the importance of fiscal consolidation, the need for strong financial supervision and monitoring of systemic risks, as well as structural reforms, to strengthen the region’s economic resilience.
He also highlighted the importance of accelerating the green transition, which is considered very important for sustainable growth. (ATN)
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