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  • » 07/08/2010, 00.00


    IMF predicts faster recovery, but dangers lurk around the corner

    Forecasts for this year are revised upward thanks to Asia, which is even better placed to resist the effects of Europe’s sagging economies. Some experts warn however, that neatly worked-out estimates can mask a situation characterised by structural problems in a number of countries.
    Beijing (AsiaNews/Agencies) – The world economy is set to expand by 4.6 per cent this year, higher than the 4.2 per cent projected in April, the International Monetary Fund (IMF) announced today. A higher GDP growth rate for Asia (7.5 per cent from 7.0 per cent in April) is the main explanation for this rosier scenario. Economies in the euro zone remain however on a sick list for possible setbacks. Experts are puzzled though by the higher-than-expected growth rates in some of the faster economies because they contradict previous forecasts.

    China’s economy is expected to grow by 10.5 per cent following a strong rebound in exports and resilient domestic demand, the IMF said, up from 10.0 per cent in the April forecast.

    India's growth was also revised higher to 9.4 per cent from 8.8 per cent as robust corporate profits and favourable financing conditions fuel investment.

    Even next year, when stimulus packages are expected to end in several countries, Asia's GDP growth is expected to settle to “a more moderate but also more sustainable rate” of 6.8 per cent, with China’s growth slowing to about 9.6 per cent and India's settling at 8.4 per cent, the IMF said in its report.

    In Japan, growth was now expected to reach 2.4 per cent this year, due mainly to stronger-than-expected exports.

    The five key Southeast Asian economies of Indonesia, Malaysia, the Philippines, Thailand and Vietnam were expected to grow by an average 6.4 per cent this year and 5.5 per cent next year.

    The IMF warned however that if the crisis in Europe continues or gets worse, the export-oriented economies of Asia are bound to suffer.

    More significantly, some analysts are not convinced by IMF projections given recent announcements and the daily experience in the economies with higher-than-usual growth.

    In China, for example, where the government has taken steps to dampen rising housing prices, the real estate market is already cooling and this already slowing down overall economic growth.

    Local experts told AsiaNews that the entire economy has felt the repercussions of a flatter real estate market right away as the number of housing starts levelled off, and demand for construction material like iron and steel declined.

    As the yuan appreciates, albeit slowly, Chinese goods will get more expensive, with negative consequences for Chinese manufacturers. All this will come inevitably at a price in terms of domestic wealth and personal consumption, all the more so if we consider that China’s safety net is quite thin.

    With manufacturing slowing down, unemployment will rise, reducing personal purchasing power as well as public spending, in what might become a vicious downward cycle.

    This explains why China's central government said it was going to invest more than US$ 100 billion in 23 new infrastructure projects (railways, roads, airports, coal mines, nuclear power stations and power grids) in the underdeveloped western regions of the country (Xinjiang, Inner Mongolia, Tibet, Sichuan and Yunnan), aiming to boost domestic demand.

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    See also

    09/12/2008 ASIA
    Economic crisis: US, China and the coming monetary storm
    The massive levels reached by the foreign debt of the United States and the excessive and unjustified devaluation of China’s yuan are two high risk factors for the world economy and stability. Solutions found so far may be useful for financial institutions but not for the population. A “transnational” oligarchy is emerging that includes central banks, the Chinese Communist Party, Russia’s oligarchies and oil sheiks.

    06/05/2009 ASIA
    A “long and severe recession” for Asia? Perhaps not
    For the International Monetary Fund the current crisis is worst than thought and will last longer than expected. Japan’s economy is set to shrink by 6.2 per cent in 2009. Financial managers are less pessimistic; for them large scale foreign investments are a sign that the recovery is underway.

    14/04/2008 ASIA
    100 million at risk of poverty: danger of famine and war in poor countries
    The World Bank and the International Monetary Fund raise the alarm: the rise in food prices is reducing entire populations to hunger. Without immediate aid, there are risks of public protests and armed conflict. Over the long term, help must be given to small farmers.

    25/05/2010 AZERBAIJAN
    Economic crisis could trigger recession in Azerbaijan
    The International Monetary Fund issues the dire warning. The country’s economy is almost entirely dependent on energy exports. Without diversification, it could plunge in recession next year. International assistance is crucial.

    23/03/2009 TURKMENISTAN
    Global crisis could further increase poverty in Turkmenistan, World Bank reports
    According to the World Bank, Turkmenistan’s economy might even shrink. The International Monetary Fund expects growth in Central Asia to be less than 2 per cent. Just last week however Turkmen President Berdymukhammedov announced 10.7 per cent growth for this year.

    Editor's choices

    Mass for a deceased underground priest. Card. Zen asks for God ‘s grace to save the Church in China and the Holy See from the 'precipice'

    Li Yuan

    Fr. Wei Heping, 41, died in mysterious circumstances, his body dumped in a river in Taiyuan (Shanxi). For the police claim he committed suicide. Family members are not allowed to even see the autopsy report. For Card. Zen the Holy See (which "is not necessarily the Pope") seeks a compromise at all costs with the Chinese government, risking "to sell out the faithful Church". Justice and Peace publish a booklet about Fr. Wei, not to forget.

    Pope: No more war, its only fruit is death, 'our self-destruction'

    Marking the Feast of All Souls, Francis celebrated Mass at the American Cemetery in Nettuno. "When so many times in history men think of a war, they are convinced of bringing a new world, they are convinced of making a 'spring'. It ends in a winter, ugly, cruel, with the reign of terror and death."


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