Economic growth in Asia has continued to exceed expectation despite the adverse impact of higher oil prices on many countries, underpinned by the global recovery and the very strong growth in China, the International Monetary Fund (IMF) said on Wednesday.

The IMF said in its latest report World Economic Outlook that the Asian regional growth rate averaged over 10 percent from mid-2003 to the first quarter of 2004, with a particularly rapid growth in China and the Asian newly industrialized economies.

Looking forward, on the assumption of a soft landing in China, the regional outlook is a continued solid but slowing growth in Asia, the IMF said.

Regional GDP growth is projected to average 7.3 percent in 2004,0.1 percentage point higher than expected in April.

The Japanese economy will also grow an annual rate of 4.4 percent in 2004, 1.1 percentage points higher than the rate IMF forecast last April and compared with 2.5 percent in 2003.

However, the growth rate in Asia next year will slow to 6.5 percent in 2005, 0.3 percentage points lower than that projected earlier this year -- with the revisions largely reflecting a more delayed slowdown in China and a growth surge in most newly industrialized countries, the IMF said in the report.

As to Japan, the growth rate will slow to 2.3 percent in 2005, compared with the increase rate of 2.8 percent forecast in the spring meeting.

The report said that the outlook for China plays a particularlyimportant role in terms of risks to the regional outlook. If China's growth were to slow less than expected, both external and domestic demand -- particularly in the newly industrialized countries -- would be strong.

The IMF also warned that the region is also relatively more vulnerable to higher oil prices -- with the impact on growth and inflation being greater than elsewhere. Higher real interest ratesin the United States could also adversely affect countries relyingon external budget financing such as Indonesia and the Philippines.

Source: Xinhua