London Daily

Focus on the big picture.
Friday, May 23, 2025

IMF raises Asia’s economic forecast on China recovery, warns of risks 

IMF raises Asia’s economic forecast on China recovery, warns of risks 

The International Monetary Fund raised Asia’s economic forecast on Tuesday as China’s recovery underpinned growth, but warned of risks from persistent inflation and global market volatility driven by Western banking sector woes.
The reopening of China’s economy will be pivotal for the region with the spillover to Asia seen focused on consumption and service-sector demand rather than investment, the IMF said.

“Asia and Pacific will be the most dynamic of the world’s major regions in 2023, predominantly driven by the buoyant outlook for China and India,” the IMF said its regional economic outlook report.

“As in the rest of the world, domestic demand is expected to remain the largest growth driver across Asia in 2023.”

Asia’s economy is expected to expand 4.6 percent this year after a 3.8 percent increase in 2022, contributing around 70 percent of global growth, the IMF said, upgrading its forecast by 0.3 of a percentage point from October.

China and India will be key drivers with an expansion of 5.2 percent and 5.9 percent, respectively, though growth in the rest of Asia is also expected to bottom out this year, the report said.

But the IMF cut next year’s Asian growth forecast by 0.2 of a point to 4.4 percent, and warned of risks to the outlook such as stickier-than-expected inflation, slowing global demand as well as the impact of US and European banking-sector stress.

“While spillovers to the region from stress in the US and European financial sectors have been relatively contained thus far, Asia remains vulnerable to tightening financial conditions and to sudden and disorderly repricing of assets,” the IMF said.

And while Asia has strong capital and liquidity buffers to fend off market shocks, the region’s highly leveraged corporate and household sectors are “significantly” more exposed to a sharp increase in borrowing costs, it added.

The IMF also urged central banks in Asia — excluding Japan and China — to keep monetary policy tight to bring down inflation, which could remain stubbornly high due in part to robust domestic demand.

“The costs of failing to bring inflation below target are likely to outweigh any benefits from keeping monetary conditions loose,” the IMF said.

“Insufficient tightening in the short term would require disproportionately more monetary tightening later to avoid high inflation becoming ingrained, making a larger contraction more likely.”

While China will be a key driver of the region’s growth, the country’s property sector remains a risk that policymakers need to address to ensure an even recovery in the sector, the IMF said.

Recent moves by the government to ease financing to developers had largely benefited bigger developers. Still, regions in China with smaller, weaker players had yet to show signs of a recovery, said Thomas Helbling, deputy director of the Asia and Pacific Department at the IMF.

“While the government’s (recent) effort has stabilized the market, it should proactively support the restructuring of weaker developers which are still suffering,” said Helbling at a media briefing in Hong Kong.

China’s policymakers have been trying to stabilize the sector that accounts for a quarter of the national gross domestic product after a string of defaults among developers and a slump in home sales.

“For regions with weaker housing markets, the recovery has yet taken place. We need further policy measures to limit potential risks,” said Helbling.
Newsletter

Related Articles

0:00
0:00
Close
UK Justice Secretary Advocates for Good Conduct Release Policies to Alleviate Prison Overcrowding
Trump Administration's Tariff Policies and Dollar Strategy Spark Global Economic Debate
UK Transfers Chagos Islands Sovereignty to Mauritius in Strategic Agreement
Bitcoin Surpasses $111,000 Mark for the First Time
Key Developments in UK Business and Economy
OpenAI Acquires Jony Ive’s Startup for $6.5 Billion to Build a Revolutionary “Third Core Device”
Turkey Weighs Citizens in Public as Erdoğan Launches National Slimming Campaign
Leaked Secret Report: How the Muslim Brotherhood Is Expanding in France—With Qatari Funding
BYD Surpasses Tesla in European Electric Vehicle Sales
West Nile Virus Detected in UK Mosquitoes for First Time
UK Exposes Russian Cyber Campaign Targeting Ukraine Aid Networks
UK Inflation Rises to 3.5% in April Amid Household Bill Increases
UK Suspends Trade Talks with Israel Amid Gaza Offensive
Taiwan claims China is using cash to win over developing nations
European Parliament Suspends Huawei Lobbyists Amid Corruption Probe
Industry Leaders Express Skepticism Over EU's New Single Market Strategy
European Parliament Considers Lifting Immunity of Five MEPs in Huawei Investigation
‘Plane Full of English Animals’: Footage Documents EasyJet Flight Chaos to Ibiza
Trump and Ramaphosa Hold Contentious White House Meeting Amid Diplomatic Strains
US Billionaires' Wealth Surges by $365 Billion Amid Tax Cut Debate
Sean 'Diddy' Combs Faces Federal Trial on Sex Trafficking and Racketeering Charges
India Blocks Thousands of Social Media Accounts Amid Tensions with Pakistan
Iran and U.S. Set for Fifth Round of Nuclear Talks Amid Rising Tensions
Russia Expands Military Presence Near Finland Amid Rising Tensions
Indian Scholar Arrested in Crackdown Over Pakistan Conflict Commentary
Ontario Manufacturers Warn U.S. Tariffs Could Create Economic 'Ghost Town'
UK and EU Reach Landmark Post-Brexit Deal to Reset Relations
Israel Eases Gaza Blockade Amid Internal Dispute Over Military Strategy
President Biden’s announcement of advanced prostate cancer sparked public sympathy—but behind closed doors, Democrats are in panic
Trump Demands Probe into Kamala Harris for Paying Celebs to Fake Endorsements
At Age 92, the World’s Oldest President Has No Succession Plan — and That Could Spark a Crisis
U.S. Concerns Mount Over Chinese 'Kill Switch' Components Found in Solar Power Infrastructure
Bipartisan Criticism Surrounds Trump's Cryptocurrency Ventures
Diplomatic Efforts on the Russia-Ukraine Conflict
Mexican Navy Ship Collides with Brooklyn Bridge, Injuries Reported
A Chinese company made solar tiles that look way nicer than regular panels!
U.S. and Philippine Forces Test High-Powered Microwave Weapons in Joint Exercise
China Unveils Advanced AI Surveillance Tools at 12th Police Equipment Expo
Japan's Three Major Banks Report Record High Net Profits for Second Consecutive Year
The Chinese Dragon: The True Winner in the India-Pakistan Clash
US and EU Make Progress in Trade Talks, While Vietnam Negotiations Also Advance
Sean 'Diddy' Combs Trial: Ex-Girlfriend Cassie Ventura Testifies About Alleged Abuse
Former Wales Rugby Star Jamie Roberts to Pursue Medical Career
Australia's Venomous Creatures Contribute to Life-Saving Antivenom Programme
Passenger Travels Under Wrong Identity on British Airways Flight
Former FBI Director James Comey Questioned by Secret Service Over Social Media Post
The Spanish Were Right: Long Working Hours Harm Brain Function
After 108 Years: Moody’s Downgrades U.S. Credit Rating
Did Former FBI Director Call for Violence Against Trump? Instagram Post Sparks Uproar
US and UAE Partner to Develop Massive AI Data Center Complex
×