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.