The International Monetary Fund (IMF) has raised its growth forecast for Asian economies, boosted by stimulus spending and a pickup in global trade.

In its regional economic outlook for Asia and the Pacific region released on Thursday, the IMF said that Asian economies, including Japan, Australia and New Zealand, are expected to grow 2.8 percent this year and 5.8 percent in 2010 — in both cases about 1.5 percentage points higher than previous forecasts published in May.

"Just as the US downturn triggered an outsized fall in Asia's GDP [gross domestic product] because international trade and finance froze, now their normalization is generating an outsized Asian upturn," the IMF said, adding that the rebound in Asian economic activity has been fastest in the export-dependent Asian economies that were hit most severely at the end of 2008.

The report said that the positive development was made possible by sounder government finances, more credible monetary policies and stronger corporate and bank balance sheets than in the past.

"These conditions gave Asia the space to cut interest rates sharply and adopt large fiscal stimulus packages," it said. "As a result, overall domestic demand has held up remarkably well, despite weak private demand."

The report has warned at the same time that Asia must adapt to 'new world' despite the present recovery.

"The main risk is that the global recovery stalls," said Roberto Cardarelli, an IMF researcher. "Despite the recent improvements in the pace of recovery, it is going to be slow."

According to the IMF's new report, China, the fastest growing economy in the region, is expected to grow 8.5 percent in 2009 and 9 percent next year, while India will enjoy a 5.4 percent growth this year and 6.4 percent in 2010.

MVZ/MTM/AKM