Asian Economies Can Recover But Not on Their Own

Asia's economies, which have been hit hard by the economic crisis, could recover next year, the head of the International Monetary Fund said, but warned that the export-dependent continent could not pull through on its own.

Eugene Hoshiko / AP People walk at a shopping street Tuesday, May 1, 2007 in Shanghai, China. May Day, on May 1, is traditionally the day socialist countries honor their workers, but in modern communist China the day kicks off a week-long Golden Week holiday which the government hopes will encourage its citizens to travel and spend, thereby boosting the economy. (AP Photo/Eugene Hoshiko)

Asia needed to boost household demand to reduce its traditional reliance on exports, but such a shift would not happen overnight, IMF Managing Director Dominique Strauss-Kahn told reporters on Tuesday in a webcast from Washington.

"It's impossible for Asia to have a recovery while the rest of the world is in bad shape."

Asian economies are likely to grow at an average rate of more than 5 percent next year with some economies well positioned to pick up once the external environment improves, he said.

China, Asia's second-biggest economy after Japan, could still hit the government's target for 8 percent growth in gross domestic product this year but to achieve this goal would be a big challenge, Strauss-Kahn said, adding that China was of "tremendous importance" to the world economy.

"In China, we see some scope for even more fiscal stimulus." China in November announced a fiscal stimulus worth 4 trillion yuan ($584 billion) to target infrastructure and other projects to cope with the global downturn. He reiterated that China's currency, the yuan, was undervalued but that the country's focus should be on economic recovery for the time being.

In its latest forecast, the IMF expects Asia's second-largest economy to expand by 6.7 percent this year, slowing sharply from 9.0 percent in 2008.

Last week, the IMF slashed its 2009 forecast for world economic growth to a slight 0.5 percent, the weakest year since World War Two, from a November estimate of 2.2 percent.

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