Asia Pacific continues to dominate world

Growth in Asia and Pacific to continue to surpass rest of world due to high domestic consumption, low interest rates and decline in oil prices, says IMF

Photo by: Reuters
Photo by: Reuters

Updated Jul 28, 2015

Asia-Pacific will continue to outpace the world in economic growth, as the International Monetary Fund’s (IMF) regional economic outlook report for Asia and the Pacific published on Thursday predicts a stable gross domestic product (GDP) growth of 5.6 percent in 2015 which will somewhat increase to 5.5 percent in 2016.

According to the IMF’s statement in its bi-annual World Economic Outlook, “Growth is set to continue over the medium term despite slowing potential growth, which reflects weaker productivity gains, the effects of aging, and infrastructure bottlenecks.”

Although global recovery remains sluggish, each country will expand at their own pace, some performing better than other. However the demand for Asian exports will still be supported, reports IMF.

Asia, accounts for nearly 40 percent of global production.

With respect to GDP growth China - the world’s second largest economy - is anticipated to decline to 6.8 percent in 2015, continuing to decelerate to a pace of 6.3 percent growth in 2016.

In contrast, the Japanese economy is expected to expand by 1.0 percent in 2015 and 1.2 percent in 2016.

According the IMF report, countries such as Australia, Malaysia and Indonesia, which export non oil commodities, recently experienced a sharp fall in prices and will continue to be affected by trade fluctuations, thus their economies are forecast to expand.

India’s GDP growth is expected to pick up pace from the previous year moving from 7.2 percent to 7.5 percent this year.

“Growth will benefit from recent policy reforms, a consequent pickup in investment, and lower oil prices,” says the IMF.

The World Bank recently noted that India’s solid expansion has helped South Asia become the fastest growing region in the world.

On the other hand, the IMF also reported many risks which need to be taken into consideration such as an unexpected decline in growth of either of the two large players in the Asia-Pacific region; China and Japan.

The robust US dollar could also be a risk as the foreign currency-denominated  has “increased rapidly in recent years, and Asia is now more vulnerable to financial market shocks," according to the IMF.

TRTWorld and agencies