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Asian recovery not sustainable: IMF

Asian recovery not sustainable: IMF article image
The International Monetary Fund (IMF) has raised the forecast for Asia's economic growth but says it may not be sustainable due to its continued reliance on the rest of the world, particularly consumer demand in the USA and Europe. Governments in the region have successfully stimulated their respective economies and global trade has lifted, giving Asia an economic boost. China's economy grew 8.9 percent in the September quarter and South Korea has also recorded significant acceleration. However, the IMF urged Asian governments to continue with supportive policies throughout 2010, as the recent boost to production seems temporary. "Much of Asia's rebound has been driven by temporary factors - a V-shaped bounce back in trade, and policy stimulus - whose importance is bound to wane over time," according to the IMF's Regional Economic Outlook for the Asia and the Pacific. It cited Japan's premature withdrawal of stimulus measures in the past as a warning: "On two occasions in Japan over the 1990s and early 2000s 'green shoots' of recovery emerged, allowing stimulus to be withdrawn. "In both cases, however, the underlying corporate and financial problems had not been resolved, and the external environment deteriorated dramatically - first during the Asian financial crisis in 1997 and then the information technology bubble collapse in 2000. As a result, a more severe downturn ensued, necessitating renewed stimulus to support activity." The IMF singled out Australia, China and India as economies in the region performing better than expected.

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