Asia's struggling economies will likely bounce back quickly once their trading partners begin to recover, the head of the International Monetary said on Tuesday, though he warned the outlook for 2009 is still grim.
The IMF's latest forecast for world economic growth is 0.5 per cent in 2009, with advanced economies contracting by 2 percent. "Those figures are the lowest rates we have experienced in the postwar period, so they really are rather gloomy," the IMF's managing director, Dominique Strauss-Kahn, said in a Webcast. Because they rely so much on exports, Asian economies will not see a turnaround until markets in the West begin to recover, Strauss-Kahn said.
But once they do, Asia could bounce back.
"A rapid recovery is possible," Strauss-Kahn said. "Some Asian economies are very good candidates to be the leading economies when things get going."
The IMF forecasts that South Korea's economy will contract by 4 percent this year. It expects China's growth to remain at a relatively strong 6.7 percent, though achieving the government's target of 8 percent could be difficult, he said.
A global comeback requires tackling problems in the financial sector as well as the wider economy, he said.
"We forecast recovery in beginning 2010, and for some countries, the end of 2009," he said. "Those figures are very uncertain and it depends a lot on the policies that may be implemented in the coming days and coming months."