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IMF: Asian policy makers must respond quickly to overheating risk

Policy makers in Asia must guard against asset bubbles and respond quickly to overheating risks in their various economies, according to the International Monetary Fund (IMF).

The organisation said a surge in credit growth and rising asset prices, especially in emerging economies, is increasing risks and governments need to respond effectively if they want to reach the same level as more developed nations.

"Policy makers in the region face a delicate balancing act in the near term: guarding against the potential buildup of financial imbalances while delivering appropriate support for growth," the organisation said in its latest regional economic outlook for Asia and the Pacific.

It expects growth in Asia to pick up gradually in 2013 to about 5.75 per cent as a result of the strengthening external and domestic demand.

According to the IMF, India, China, Indonesia and the Philippines all need to improve their economic institutions. It defined institutional strength as demonstrating higher political stability, better bureaucratic capability, less corruption and fewer conflicts.

By Tony Aynsley