Tags: IMF | Economist | Asia | Recession

Former IMF Economist Mark Dow: Asia Will Avoid Recession

Wednesday, 15 Aug 2012 08:37 AM

Asian economies will avoid dipping back into a recession, but Europe won't be so lucky, said Mark Dow, former policy economist for the International Monetary Fund.

Japan's gross domestic product grew less than expected in the second quarter, expanding 1.4 percent from a year ago versus expectations for a 2.5 percent increase and well below the 5.5 percent recorded in the first quarter.

China's trade surplus has fallen in recent months, while the Asian giant's GDP growth rates have cooled as well, expanding 7.5 percent in the second quarter after decades of double-digit growth.

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Still, expect Asia to avoid Europe's fate and pull through.

"Asia shouldn't fall into recession but the slowdown should be meaningful and China is the epicenter of that," Dow told Yahoo. "China's economy is the reverse of firing on all cylinders."

Expect Asian central banks to roll out stimulus measures to jolt their economies and keep them afloat until the economy resumes growth on its own.

"They will prop the economy up to some degree, but just not enough to get it back to the rip-roaring state that we have become accustomed to," Dow said.

"[Therefore] I think they slow down, but I don't think they fall off a cliff."

Europe, meanwhile, won't be so lucky, with the continent's healthy economies in Germany, France and the Netherlands growing less than 1 percent in the second quarter.

As a whole, the eurozone economy contracted 0.2 percent in the second quarter, according to Eurostat, the continent's statistics agency.

"Europe is in a recession and will stay in a recession for the foreseeable future," said Dow.

"There is very little that can resuscitate them and get them back to a growth path while deleveraging is still going on."

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A recession is officially defined as two straight quarters of falling output.

"The big picture is that the economic growth required to bring the region's debt crisis to an end is still nowhere in sight," said Jonathan Loynes, chief European economist at Capital Economics, according to The Associated Press.

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