Growth in Asia is picking up momentum with the Chinese economy set to perform better than previously expected, according to the International Monetary Fund (IMF).
In its latest assessment of regional growth prospects the IMF revised up its forecasts for growth in China and Japan.
China’s GDP will grow by 6.6 per cent this year, the IMF said, 0.4 percentage points higher than their previous forecasts.
China’s government is targeting growth of around 6.5 per cent, its lowest target in more than 20 years.
Meanwhile Japan’s growth this year was revised up by 0.7 percentage points, as the world’s third-largest economy finally starts to heat up.
The outlook for the Asian regional economy remains “robust – the strongest in the world, in fact”, the report said, with the region as a whole expected to see growth of 5.5 per cent this year.
Asian economies have outpaced other regions of the world since the financial crisis. The G20 group of the largest economies (including multiple Asian nations) saw output growth of only 3.1 per cent in 2016, according to the Organisation for Economic Co-operation and Development (OECD) against the 5.3 per cent enjoyed by the Asia-Pacific region.
Economies throughout Asia have been buoyed by stimulus from China and Japan, the two biggest economies in the world outside of the US, the IMF said.
However, the influential intergovernmental body noted massive risks remain to growth.
China’s government encouraged a big build-up of borrowing to sustain the nation’s heady growth rate in the aftermath of the global financial crisis.
The ruling Communist party is currently trying to manage the transition from high-growth “convergence” growth, based on rapidly catching up in technology adoption, towards the more mature, services-oriented economy of more developed countries.
Across the broader region the IMF warns tighter global financial conditions could result in money leaving emerging Asian economies back towards developed nations with higher interest rates.
The region is also vulnerable to increased protectionism, the IMF said. Many Asian nations have benefited spectacularly from the march of globalisation, but would be vulnerable to increased trade barriers.