October 20, 2007	Saturday	Shawwal 7, 1428

WASHINGTON, Oct 19: The International Monetary Fund said Asia-Pacific economic regional growth is expected to slow to 8 per cent this year and to 7.2 per cent in 2008 if China keeps a tight rein on monetary policy.

The moderation in growth is being driven by slipping external demand, particularly from the United States and Europe, according to the IMF’s new Regional Economic Outlook report on the Asia-Pacific area.

“This forecast also assumes an effective policy tightening in China and some slowdown from that,” David Burton, director of the IMF Asia and Pacific department, said at a news briefing here.

The outlook for growth in emerging Asia is increasingly uncertain due to the US sub-prime crisis that erupted in August, rattling financial markets worldwide.

“A further bout of global financial volatility could have significant spillovers on the region, including by potentially reversing capital inflows,” Burton said.

Asked about China’s currency, regarded by the IMF, the United States and most of the Western world as undervalued, Burton said: “China has made a start” in allowing it to appreciate.

After the Chinese government de-linked the renminbi from the dollar in 2005, the Chinese yuan currency has fallen about 10 per cent in real effective terms, and about 10 per cent in nominal effective terms, he said.

“They should pay more attention” to a basket of currencies, he said, “not just the dollar rate.” The Chinese government’s measures to cool the sizzling economy, including interest rate hikes, have been insufficient, according to recent data.

China’s inflation rate hovered at near 10-year highs in September as the economy edged closer to overheating, a top planning official said on Thursday, signalling that more cooling measures were on the way.

The consumer price index rose 6.2 per cent in September and 4.1 per cent for the first nine months of the year, National Development and Reform Commission vice chairman Zhu Zhixin told journalists.

The September figure was down slightly from a 6.5 per cent rise in August, the highest inflation China had seen in more than a decade, but it ensured the government’s full-year target of 3 per cent would be exceeded.

“We estimate the price level will remain high for quite some time,” Zhu said.

“There are a number of acute problems and difficulties in China’s economy.

The trend of fast growth tending towards overheating has not been reversed.” He said the economy had expanded by around 11.5 per cent in the third quarter, further revealing a lack of bite to interest rate hikes and other measures taken by the government to cool the economy. —AFP