Asian economies are unlikely to undergo a sustained recovery until mid-2010 and can not rely on China to pull the region out of its current slump, a senior International Monetary Fund official said on Wednesday, casting doubts on a "green shoots" theory that has helped bolster Asian stock markets recently.
Joshua Felman, assistant director for the IMF's Asia and Pacific department, said China's relatively strong performance this year will do little in aiding other Asian countries because most of its growth will come from domestic demand, including public infrastructure projects, that does not benefit other regional economies.
Most of Asia instead will have to wait at least another year before advanced western economies recover, said Mr Felman in presenting the IMF's latest semi-annual report on the region in Singapore.
In a gloomy assessment, the IMF report predicted that Asia is suffering a "long and severe recession" and the region's recovery is likely to be weak after the slowdown.
It urged Asian governments to adopt more stimulus measures, including interest rate cuts and increased fiscal spending, to counter several potential downside risks, including a fall in corporate investments and a rise in the number of jobless.
The IMF predicted that the regional economic growth will expand by 1.3 per cent this year, down from 5.1 per cent in 2008, before growing by 4.3 per cent in 2010.
China will be the strongest regional performer this year, with a growth rate of 6.5 per cent, while export-dependent Singapore will be the worst as its economy contracts by 10 per cent.
Copyright: The Financial Times Limited 2009
