World Business

Asia accounts for 3rd of world output in five years: IMF

(Xinhua)
Updated: 2010-06-16 10:20

CANBERRA - Asia's economy, including Australia and New Zealand, will be about 50 percent larger in five years, accounting for more than a third of world output, Australian Associated Press (AAP) quoted IMF as saying on Wednesday.

The Finance & Development Magazine of the International Monetary Fund (IMF) for June released in Washington on Tuesday also said in 20 years' time, Asian gross domestic product (GDP) will exceed that of the Group of Seven (G7) major industrial economies -- the United States, Japan, Britain, France, Germany, Canada and Italy.

"The possibility that Asia could become the world's largest economic region by 2030 is not idle speculation," IMF's director of Asia and Pacific Development Annop Singh said in his article Asia - Leading the Way.

"It seems very plausible, based on what Asia has already achieved in (two) decades."

This included Asia's emerging economies doubling their share of world trade and tripling their share of world gross domestic product (GDP).

China and India, Australia's No 1 trading partner and its third export destination, respectively, have been leading the way.
But the "phenomenon" is by no means limited to these two countries, Singh said, adding that Asia's economic importance is " unmistakable and palpable".

Asia has been making a stronger contribution to the global recovery than any other region and, in contrast to previous episodes, recovery in many Asian countries was being driven by two engines, exports and strong domestic demand.

This in part reflects policy stimulus, but also resilient private demand.

Asia was not heavily exposed to the kinds of toxic securities that were at the center of global financial crisis, but its exports were hurt by the collapse in demand from advanced economies.

"The impact of the external shock was mitigated for countries with large domestic demand bases, such as China, India, and Indonesia, and some of the commodity producers, such as Australia, " Singh said.

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By the end of 2009, economies across the region rebounded strongly, and output and exports had returned to pre-crisis levels in most of Asia, including in the hardest-hit economies.

"Although there are still near-term risks in the outlook, in many ways Asia is emerging from the recession with its standing in the world strengthened," Singh wrote.

"The risks include Asia's - and other regions' - vulnerability to renewed negative shocks to global growth and financial markets. "
But, Singh said, countries across the region have strengthened their monetary and fiscal policy frameworks, while boosting domestic demand and deepening financial linkages with other economies.

The development of infrastructure to boost growth potential is going ahead rapidly in many countries and barriers to trade are being lifted "in ways that will allow more people to enjoy the gains from international trade", Singh noted.