Growth in the Asia-Pacific region has slowed. External headwinds played a major
role, as the recovery in advanced economies suffered setbacks. Weaker momentum
in China and India also weighed on regional economies. For Asia as a whole, GDP
growth fell to its lowest rate since the 2008 global financial crisis during the
first half of 2012. With inflationary pressures easing, macroeconomic policy
stances remained generally supportive of domestic demand and in some cases were
eased further in response to the slowdown. More broadly, financial conditions
remain accommodative, and capital inflows have resumed. Going forward, growth is
projected to pick up very gradually, and Asia should remain the global growth
leader, expanding over 2 percentage points faster than the world average next
year. However, considerable downside risks remain, in particular with regard to
the euro area crisis. The priorities for policymakers are to support
noninflationary growth, maintain financial stability, and remain responsive to
weaker-than-expected outcomes. Refocusing structural and fiscal reform efforts
toward sustained and more inclusive growth remains a priority.