China Slowdown and Abenomics Biggest Risks to Asia Says IMF

A sharper-than-expected slowdown in China due to financial sector vulnerabilities coupled with the failure of Abenomics to sustainably turnaround Japan’s economy are two main risks to Asia’s economic outlook, the International Monetary Fund (IMF) said.
Nevertheless, the IMF expects growth in Asia to remain steady at 5.4 percent this year, up from an earlier 5.3 percent forecast, before improving slightly to 5.5 percent next year. Last year, the region grew 5.2 percent.

Asia also faces risks originating from outside the region it warned, noting a sudden or sharper-than-anticipated tightening of global financial conditions remains a threat.

“As growth in the United States improves, global interest rates will rise and Asia will face a further tightening in financial conditions,” the IMF said.

“Bouts of capital flow and asset price volatility are likely along the way with exchange rates, equity prices, and government bond yields affected by changes in global risk aversion and capital flows,” it said.

However, the fund says a pickup in external demand alongside a recovery in advanced economies and resilient domestic demand should continue to support growth across most of the region.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza