The IMF has just published its latest Regional Economic Outlook (REO) for Asia and the Pacific. The REO reports that the spillovers from global growth amid still high inflation pressures in much of the region mean that policymakers inAsia face a delicate balancing act.
Growth inAsiahas moderated since the second quarter of 2011, mainly reflecting a weakening of external demand. Domestic demand is still resilient, however, and it should continue to sustain activity across the region, contributing to relatively robust growth of 6.3 percent in 2011 and 6.7 percent in 2012, slightly below last April’s forecast.
Although economies in the Asia Pacific region are still expected to continue growing at solid rates, downside risks from a weakening global economy have greatly intensified and underscore the need to shift the region’s growth model.
In the near-term, policy makers face the challenging task of navigating opposing risks to growth and financial stability amid a highly uncertain global environment. A pause in monetary tightening may be warranted in some countries until such uncertainties have lessened.
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