More regionally driven growth needed: IMF

ALTHOUGH Asia is growing at quite a robust pace of 5.6 per cent, growth is slowing. What are the reasons for the slowdown?

Asia's robust growth performance since the global financial crisis is testament to right sets of policies and structural reforms implemented during the past decade and a half. That said, Asia's growth has moderated, owing to several factors. First of all, it's because of convergence. Many Asian economies are moving from being low-income countries to being middle-income countries. And some middle-income countries are becoming high-income countries. As economic theory tells us, as a low-income country you can have many growth opportunities; you can mimic many activities of advanced economies and so on. So growth rates tend to be higher. But as countries move up the ladder, their growth rates naturally start to moderate. This is happening in Asia. China is a good example. Second, China's role in Asia's growth has been dominant. When China slows down because of convergence, it has an impact on the supply chain network, which affects many Asian economies. Third, before the global financial crisis, advanced economies were growing really fast. We now know that a lot of that was the result of bubbles and other unsustainable forces. Asia benefited a lot before the global financial crisis by exporting to advanced economies. But those unusual opportunities are gone now. So after the crisis, Asia's growth has naturally slowed. Now Asia has to find new growth momentum from within the region, including domestic expenditure-led growth.

You mentioned the slowdown in China. How confident are you that the deleveraging taking place in China will happen in an orderly fashion. Also, how long do you think it will take?