Weaker momentum in Asia's growth engines, China and India, coupled with setbacks in the recovery in advanced economies, has slowed down growth in the region, the International Monetary Fund (IMF) said on Friday.
For Asia as a whole, growth domestic product (GDP) growth fell to its lowest rate since the 2008 global financial crisis during the first half of 2012 averaging 5.5% though still well above the global average, it said.
"External headwinds played a major role, as the recovery in advanced economies suffered setbacks," IMF said in its October update of the Asia and Pacific Regional Economic Outlook. "Weaker momentum in China and India also weighed on regional economies."
While in the case of India, weakening investor sentiment adding to supply constraints contributed to the slowdown, in China it was due to what IMF called "deliberate efforts to engineer a soft landing." Asia's growth is unlikely to pick up in the second half of 2012 as was expected in the April 2012 regional outlook, given the recent deterioration of a broad range of indicators encompassing activity variables from industrial Asia, the large emerging Asia growth leaders, and the smaller export-dependent economies, the Fund said.
Overall, after slowing down in 2011, Asia's growth is forecast to moderate further in 2012 to 5%, 2 percentage points below 2011 and IMF's April 2012 forecast.
That said, Asia will remain the global growth leader, expanding over 2 percentage points faster than the world average, IMF said.