For Asia as a whole, growth will pick up modestly to about 5¾ percent in 2013, largely as a result of

recovering external demand and continued solid domestic demand. Unemployment is at multiyear
lows in several economies.
Asian economies will also benefit from internal demand spillovers, particularly growing Chinese
demand and the policy-led pickup in Japan. Indeed, for several economies, direct and indirect demand from
China and Japan are almost as important as demand from the United States and Europe.
Inflation is expected to remain generally within central banks’ targets (explicit or implicit). Reflecting
the moderate acceleration of growth and a stable outlook for global food and commodity prices, headline
inflation is expected to increase slightly to 4 percent in 2013, from 3½ percent in 2012.
 

• China’s growth is set to accelerate slightly to about 8 percent in 2013, reflecting continued robust domestic
demand in both consumption and investment and renewed external demand. Inflation will pick up
only modestly to an average of 3 percent in 2013.
• In Korea, improved exports should help spur private investment and help growth rebound to 2¾ percent.
Inflation is rising but is expected to remain close to the lower bound of the target band.
• Growth will rise in India to 5¾ percent in 2013 as a result of improved external demand and recently
implemented progrowth measures. Significant structural challenges will likely lower potential output
over the medium term and also keep inflation elevated by regional standards.
• Growth in the ASEAN-5 economies will remain strong at 6 percent in 2013, reflecting resilient
domestic demand. A large pipeline of projects under the Economic Transformation Plan will propel
strong investment in Malaysia; robust remittance flows and low interest rates should continue to
support private consumption and investment in the Philippines; and Indonesia will benefit from a
recovery of commodity demand in China. In Thailand, growth is expected to return to a more normal
pace after a V-shaped recovery driven by public reconstruction and other flood-related investment in 2012.


The potential impact of external risks on Asia remains considerable. In the event of a severe global slowdown,
falling external demand would exert a powerful drag on Asia’s most open economies, including through the second-
round impact of lower investment and employment in export-oriented sectors. 



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Source: World economic outlook April 2013 - International Monetary Fund