IMF says to lift Asian growth forecasts

IMF says to lift Asian growth forecasts

Dominic Whiting Reuters Bangkok

The International Monetary Fund said on Wednesday it would probably lift its 2002 growth forecasts for much of Asia, and most sharply for South Korea, because exports and consumption are growing faster than expected.

The IMF's deputy director for Asia Pacific, Charles Adams, said the body was likely to raise its 2002 projections of 5.9 percent growth for developing Asia and 3.6 percent for Asia's newly industrialized economies in August or September.

"There's a reasonably strong likelihood that we'll mark up a number of our Asia projections," Adams told a news conference in Bangkok.

"We are starting to see some trade data...and industrial production, stronger than what we expected," he said.

"The story we had was of a recovery gaining momentum, but it may be coming slightly stronger and slightly earlier than expected."

The IMF economic growth projections for 2002 and 2003 were published in its World Economic Outlook a month ago.

Adams said the IMF's forecast of five percent growth for South Korea was probably the furthest off the mark, with consensus economist estimates putting expected expansion of gross domestic product (GDP) at around six percent.

"Korea would be a case where, from what we've seen, the upward revision could be quite large," Adams said.

"In the case of Korea domestic demand is stronger than expected."

The IMF classifies South Korea, Hong Kong, Singapore and Taiwan as newly industrialized economies.

Japan, the region's only developed economy, was unlikely to outperform the IMF's projection of a one percent contraction in GDP this year, Adams said.

He said the Japanese economy would start turning the corner at the end of the year, with exports benefiting from a global recovery. But domestic consumption would stay depressed until structural reforms were implemented, he said.

"It is a recovery, but a modest and imported recovery," Adams said of Japan's economic prospects. "The message is, generate your own."

Adams said although intra-Asian trade was on the rise, much was due to outsourcing, and the United States remained the main driver of growth for the region.

He said U.S. consumption would only increase mildly this year because it was already robust, but growing fixed investment in the United States during a recovery was likely to help Asian exports.