Krishna Srinivasan, the IMF Director for the Asia-Pacific region, offered an optimistic assessment of Asia’s economic outlook, noting that the region has successfully reduced inflation to low and stable levels more quickly than other parts of the world.
Srinivasan highlighted that Asia’s economies performed better than anticipated in the first half of the year, resulting in an upgraded growth forecast of 4.6% for 2024 and 4.4% for 2025. He emphasized that Asia remains the driving force of global growth, contributing 60% to the world’s economic expansion despite making up only about 40% of global GDP.
Looking ahead, domestic demand in advanced Asian economies is expected to strengthen as the effects of past monetary tightening fade. Growth in India and China is expected to remain resilient, though it may slow slightly in 2025. Emerging markets outside China and India are projected to experience solid, broad-based growth.
In addition to leading in growth, Asia has also successfully brought inflation down to stable levels faster than other regions. In Emerging Asia, the disinflation process is nearly complete. However, wage pressures in Australia and New Zealand continue to keep services inflation elevated, though this is expected to ease over the next 12 months. This environment may allow many Asian central banks to consider cutting interest rates sooner, especially as the U.S. Federal Reserve has already started its easing cycle.
Srinivasan also stressed that while there is some room for monetary policy easing, fiscal policy remains constrained due to the increased public debt from the pandemic. He called for careful fiscal management, including budget reconsolidation, to create financial buffers against potential risks and address long-term challenges such as climate change and aging populations.
