MANILA, Philippines – A slowdown in investments in China’s economy is seen to adversely affect exporters in Southeast Asia, including the Philippines, according to the International Monetary Fund (IMF).
In its latest World Economic Outlook report, the IMF warned that the slowdown in the Chinese economy will likely affect exporters in the region through the disruption of supply chains.
The IMF said strong growth in emerging market economies was fueled, among others, by a housing boom experienced by China as well as the implementation of macroeconomic stimulus measures to counter the ill effects of the global economic crisis.
It stated that China experienced residential real estate and investment booms that fueled gross domestic product (GDP) growth in 2009 and 2010. The fund warned, however, that these could be “reversed and result in a sharper-than-expected investment slowdown in the future.”
The IMF said that this will have an adverse impact on potential growth in emerging Asia and in other regions. Most of the impact of the slowdown will be felt in Asia, particularly on “commodity exporters.”
“Such a shock would strongly affect economies in the highly interlinked Asian supply chain,” it said.
The slowdown in China is considered by the IMF as a key medium-term growth risk in its growth projections for Asia’s emerging economies.
The IMF projected growth to continue in Asia and the ASEAN regions. The IMF projected Asia’s GDP to hit 5.4% this year and 5.8% next year. The same forecasts were given ASEAN.
China is projected to grow by 7.8% this year and 8.2% next year, lower than earlier forecasts of 8% and 8.5%, respectively.
The Philippines, whose fourth-biggest export market is China, is seen to post a 4.8% growth this year and the next. –Cai Ordinario, Rappler.com
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