World news:IMF Asia to face a difficult 2012

Events unfolding far from Asia's shores could shape the region's
economic outlook for 2012, but Asian policymakers still have the room
to respond aggressively to a deteriorating global economic scenario,
economists with the International Monetary Fund (IMF) have said.

"Despite the prevailing global uncertainty, Asia has until now, proven
to be very resilient. It has boasted strong domestic demand, low
unemployment, and factories working at near-full capacity. While
credit growth has slowed from the torrid pace of early 2011, it
remains robust in most economies," Xinhua quoted an article on the IMF
blog as saying.

However, Asia's heavy reliance on trade was likely to make 2012 a
difficult year.

Asia is one of the world's most trade-dependent regions, exporting
everything from commodities like metals and rice to sophisticated
electronic products and cars.

Regional growth has already started to slow due to weaker demand,
although domestic factors such as tighter macroeconomic policy stances
have also played a role, especially in India and China.

Recent stresses in several regional financial markets suggest that
financial channels of contagion also pose a risk for Asia, according
to the article.

"Further financial turmoil in the euro zone would likely have a
substantial impact on Asia by reducing access to credit. Euro zone
banks are an important source of funding for many Asian banking
systems, and play a crucial role in providing trade credit," it said.

But there was still sufficient policy space in the region, though less
than at the start of the global financial crisis in some countries.

Some economies have already started monetary easing.

Fiscal policy consolidation could be appropriately delayed if external
demand were to collapse, especially where low levels of public debt
afford space for measures, it said.

Asia is home to some of the world's most dynamic economies, but
several reforms were needed to sustain the region's excellent
historical performance and reduce vulnerabilities to external shocks
in the medium term.


source:http://www.pravasitoday.com/asia-to-face-a-difficult-2012-imf

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