Asia's growth to slow to 5.25%: IMF

Asia's growth to slow to 5.25%: IMF

Economic expansion in Asia is expected to slow to 5.25 percent in 2005 from 6.25 percent in 2004 as export growth subsides, the International Monetary Fund (IMF) said in an in-house publication.

Growth in the emerging market nations in Asia, which includes China, India, Hong Kong, Singapore, Taiwan, Indonesia, Malaysia, the Philippines and Thailand, is expected to be 6.25 percent in 2005, down from 7.5 percent in 2004, the IMF said.

Last year's surge in electronics exports from the region -- including a 41 percent increase in semiconductor sales -- will drop to a more normal pace this year, the IMF said.

Sluggish growth in the rest of the world may contribute an additional decline in demand in the second half of the year, the IMF said.

High oil prices, which are about 20 percent higher than they were at the end of 2004, could hurt economic growth as well and boost inflation, the lender said. Interest rates and currencies in the region are also at risk because of global trade imbalances.

Asia's policy makers "need to be prepared for a slowdown in growth, which might warrant some compensating macroeconomic stimulus," the IMF said.

"But they also need to guard against a rise in inflation, requiring some policy tightening."

Low-income countries in Asia will also be affected by new rules for global textile trade. Prices have fallen nearly 12 percent on apparel imports from China into the U.S. since a four- decade system of textile quotas ended Dec. 31.

Textile exports from low-income Asian nations could fall 8 percent to 18 percent, which would reduce growth for about one year by 0.5 to 2.75 percentage points. -- Bloomberg