Two Asian giants, India and China, would continue to lead the economic growth story of this continent as this past year, a top International Monetary Fund (IMF) official has said.
"We expect growth to remain strong. We expect it to settle at a more sustainable rate of about 7 per cent for Asia as a whole, slightly down from 8 percent in 2010. We see China and India continuing to lead Asia's growth," IMF Head (Asia-Pacific) Anoop Singh said on Wednesday.
"Despite this positive outlook, there are still downside risks, but these mainly come from the external environment: the risk that global growth could be weaker than we anticipate.
Also financial spillovers from advanced countries, especially in Europe, could be another source of concern, and constitute another downside risk," Singh said in interview to the IMF online survey.
However he warned that the strength of Asia's growth could lead to the threat of inflation.
Asia had to contend with the risks posed by possibly weaker global economic growth and financial spillovers from advanced economies, he suggested, but predicted that the region's economic importance would continue to increase, he added.
"I think what you've been seeing in the last decade has been the further rise of Asia, and this time I will say it is a large part due to the rapid growth in China and India and this is expected to continue over the medium and the long term," Singh said in response to a question.
Certainly the region has a certain dependence that needs to be rebalanced so that the momentum comes from a broader set of policies, he said.
"It is true that across Asia the region has been more dependent on exports than other emerging markets in the world.
And, therefore, in order to maintain these high growth rates, we do believe the region should reduce its reliance on export growth and we have emphasised the importance of rebalancing. That is, to raise domestic demand in Asia. This is also a major topic in our discussions with countries in Asia," Singh said.
In 2011, he said Asia will face two set of challenges. The first will involve managing the timing and exit from policy stimulus that many countries in Asia have used.
"This is because output is growing above potential in most economies. In fact, output gaps are closing and inflation pressures are emerging. So, our view is that although many countries have taken steps to remove monetary stimulus, there still is further room to remove policy stimulus," he said.