With India and China leading the way with projected 2010 growth rates of 9.7 per cent and 10.5 per cent, respectively, Asia remains firmly in the lead of the global economic recovery, according to the International Monetary Fund (IMF).
Strong growth in the region is set to continue, the IMF said Thursday in its latest Regional Economic Outlook (REO) for Asia and the Pacific which was released in Jakarta.
The expansion in Asia exceeded expectations in the first half of the year, the IMF said, prompting the Fund to revise up its 2010 growth forecast for the region to 8 per cent, nearly 1 percentage point higher than its April forecast.
Economies across the region are expanding strongly. Indonesia is expected to grow by 6 percent, while in Japan, growth is now projected at 2.8 per cent. In 2011, regional growth is expected to moderate to a more sustainable pace of 6.8 per cent.
Strong economic growth is leading to new policy challenges, according to the REO analysis. Inflationary pressures are continuing to build, while prices in some property markets are growing at double-digit rates.
With Asia set to remain an attractive destination for foreign investment given the sluggish recovery in US and Europe, capital inflows could add further to domestic price pressures in the period ahead, the IMF said.
The time has therefore come for countries in the region to normalise monetary and fiscal policy stances, according to Anoop Singh, Director of the IMF's Asia and Pacific Department.