July 19, 2012 / 18:52 IST
Asian economies, including India, will have to go in for another round of monetary policy easing to tide over the impact of difficult global economic
situation, the Asian Development Bank (ADB) said today.
"Policymakers (in Asia) may need to deploy another round of fiscal and monetary measures to safeguard economic growth and ensure that growth is inclusive," the ADB said in its Asian Economic Integration Monitor report.
The report further said that with the weakening of the global economic conditions and uncertain prospects of recovery, the external environment for developing Asia is expected to remain difficult. It is widely expected that Reserve Bank of India (RBI) might slash key rates by 0.25% in its monetary
policy review to be unveiled on July 31.
India's economic growth slowed to a nine year low of 6.5% in the 2011-12 fiscal, the industry has been demanding rate cut by RBI to promote growth. The Manila-based ADB said there is a need for increased policy cooperation in developing Asia to boost economic growth and mitigate the impact of external shock.
"A prolonged period of weak growth and financial fragility in advanced economies highlight the urgent need for internationally coordinated policy responses and greater levels of regional cooperation," it added. "To address key global and regional development challenges and cope with the transformation process, regional economic cooperation is likely to play an increasingly important role," it said.
The ADB had last week lowered the growth forecast for India to 6.5% for the current fiscal from 7% projected earlier. According to official projections, Indian economy is expected to grow at 7.6% (+/- 0.25%) in the current fiscal (April-March).
The International Monetary Fund (IMF) had also cut the global growth forecast for 2012 to 3.5%from 3.6%. For 2013, the growth forecast has been lowered to 3.9%, from 4.1%. The Washington-based multi-lateral institution reduced
the growth forecast for India, by 0.7% to 6.1% for 2012.
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