(Xinhua)
Updated: 2007-10-19 22:02

WASHINGTON -- Financial systems in Asia appear well placed to handle the effects of the global financial market turbulence that broke out in July, said a report released by the International Monetary Fund on Friday.

The report, Regional Economic Outlook: Asia and Pacific, explained that Asia was not at the epicenter of the recent turmoil, and markets and financial institutions in the region have been less affected to date than those in the United States and Europe.

"This reflects the relatively small direct exposure to US subprime mortgages and, more broadly, to leveraged and complex structured credit products, including by hedge funds," said the report.

But it also warned that markets have begun to normalize somewhat at the time of this writing, although much uncertainty remains.

The report expressed optimism about Asia's future economic performance, saying growth has been stronger than expected across much of the region, with domestic demand making an increasing contribution in a number of economies.

"China and India continued to lead the way, with high growth backed by strong investment, although the contribution of net exports to growth in China continues to rise," said the report.

"The pace of activity in the NIEs and ASEAN-5 remained solid, with strong investment in the former and strong consumption in the latter," the report added.

The NIEs, or Newly Industrialized Economies, refers to Hong Kong and Taiwan of China, South Korea, Singapore. ASEAN-5 refers to Indonesia, Malaysia, the Philippines, Thailand, and Vietnam.

China is expected to increase 11.5 percent in 2007 and 10.0 percent in 2008, while India is projected to expand 8.9 percent this year and 8.4 percent next year.

The Asian economies as a whole will grow robustly at 8.0 percent this year and moderately to a still-brisk 6.9 percent next year, said the report.