The International Monetary Fund (IMF) has just launched its latest Regional Economic Outlook (REO) for Asia and the Pacific, “Consolidating the Recovery and Building Sustainable Growth”. The expansion in Asia exceeded expectations in the first half of the year. China and India are leading the way with projected 2010 growth rates of 10.5 percent and 9.7 percent respectively.
According to the REO analysis, the strong economic growth is leading to new policy challenges. The report points to the need for further tightening of monetary policy in many countries in Asia, including through greater exchange rate appreciation.
Managing capital inflows into the region, however, is no easy task. These inflows present many opportunities, but they also pose potential risks to financial stability.
According to the IMF, the top policy priority over the medium term is rebalancing Asia’s growth.
The full report is available on the web.