TOKYO – Risks to Asia’s economy have increased from escalating trade tensions, China’s property sector woes and the potential for further market turbulence, the International Monetary Fund (IMF) said on Nov 1.
Persistent downward price pressures from China can “provoke trade tensions” by hurting sectors in neighbouring countries with similar export structures, the IMF said, urging Beijing to take steps to achieve a more demand-driven recovery for its economy.
“A longer and larger-than-expected slowdown in China would be harmful for both the region and the global economy,” the IMF said in its regional economic outlook report for Asia.
“China’s policy response is critical in this context,” it said, calling on the need for steps to facilitate property sector adjustment and strengthen private consumption.
In its latest forecast, the IMF expects Asia’s economy to expand 4.6 per cent in 2024 and 4.4 per cent in 2025 with looser monetary policy across the globe seen boosting private demand next year.
The projections for 2024 and 2025 were both revised up by 0.1 percentage point from the IMF’s forecasts made in April, but lower than the 5 per cent expansion in 2023.
Risks were “tilted to the downside” as past monetary tightening steps and geopolitical tensions could hurt global demand, increase trade costs and jolt markets, the IMF said.
“An acute risk is the escalation in tit-for-tat retaliatory tariffs between major trading partners”, which would aggravate trade fragmentation and hurt growth in the region, it said.
While low growth, high debt and escalating wars topped the official agenda at last week’s IMF and World Bank annual meetings, finance leaders spent much of their energy worrying about the potential impacts of a return of Donald Trump to power in the Nov 5 US presidential election.
Trump has vowed to impose a 10 per cent