Emerging Asia to grow 8.5% in 2010

Emerging Asia is expected to grow at more than twice the pace of the global economy this year, led by China and India, a top International Monetary Fund (IMF)?official said. The economy of "the world's most dynamic region" will expand by about 8.5 per cent in 2010, IMF First Deputy Managing Director John Lipsky said yesterday in a speech in Hanoi. The world economy is forecast to "bounce back" to growth of about four per cent in 2010 and 4.25 per cent in 2011, he said. "Asia is benefiting from this rebound, while at the same time helping to lead the way to stronger global growth," Lipsky said. "A great challenge is to ensure that all Asians benefit from the region's dynamism, and to insure that rising prosperity reaches as many of the region's citizens as possible." Asia is leading a global recovery from the worst slowdown since the Second World War, prompting the region's central banks to start removing some emergency steps taken to counter the slump. Policy makers in China, India and Vietnam have tightened monetary conditions amid signs that accelerating growth is fueling inflation and increasing the risk of asset bubbles. "China cushioned an export collapse with strong domestic demand, lifting credit constraints and implementing an exceptionally large fiscal stimulus," Lipsky said, explaining the region's performance. "Others reaped rewards from China's stimulus, including those relying on commodity and capital goods exports." He said Asia's developing economies must invest more in infrastructure and social welfare to promote long-term growth in a region. Lipsky also said despite general macroeconomic stability, some threats remain and financial sector soundness must be further improved as a recovery takes hold. While Asia is helping lead the world toward stronger growth after the global crisis that began in 2008, the region's developing economies face key policy challenges, said Lipsky. "While the region's story is very much a positive one it should not be forgotten that significant numbers of the region's citizens remain poor or vulnerable. In developing countries, even small economic dislocations can provoke substantial challenges," he said. The recent crisis pushed an estimated 14 million people back into poverty in Asia. "Agricultural poverty remains a particular problem, partly reflecting a widening gap between urban and rural income," he said. He was speaking to an international gathering of policymakers, diplomats and analysts discussing post-crisis growth and poverty reduction in Asia.