The International Monetary Fund warned Tuesday that fears over the global economy and a rapid slowdown in China were putting the brakes on Asian growth, as it called Japan the region's "main bright spot".The Washington-based Fund pared back its growth forecast for the region, saying it expected Asia's economies to expand at an average 5.25 percent through this year and 2014, still strong but "weaker than anticipated" in its April World Economic Outlook.
"During the first half of 2013, growth in Asia generally moderated," said the IMF's latest report, published Tuesday.
"This was due to a more rapid slowdown in the pace of growth in China, which affected industrial activity in much of emerging Asia," it added.
However, the report credited Japanese Prime Minister Shinzo Abe's growth policy blitz for powering the world's third-largest economy since he swept to power late last year.
The report projects Japan's economy will expand 2.0 percent this year before slowing to 1.2 percent in 2014 as Tokyo ushers in a sales tax hike.
"Japan was the main bright spot, reflecting the new policy momentum," the report said.
Still, the IMF also warned that Tokyo must enact deeper reforms -- including liberalising Japan's labour market and chopping trade barriers -- or its bid to reboot the long-stagnant economy would fail.
Across the region's fast-developing economies, the IMF said it was keeping its outlook for continued strong growth although "the risks are tilted to the downside".
"A major downside risk is a synchronised global slowdown, which would take a heavy toll on the region's export-dependent economies," it said.
"Another risk is that capital outflows -- due to a further tightening in US monetary conditions or deteriorating domestic fundamentals -- could intensify."
Indonesia, India and other emerging markets have been hit by huge outflows of foreign cash since May when the US Federal Reserve first signalled it may start tapering its stimulus drive, known as quantitative easing.
The Fed's massive bond-buying programme saw a huge investment splurge in emerging economies when it was unveiled last year. That money started racing back the other way when the central bank said it was considering a wind down.
Slower expansion in China
The IMF also cut its 2013 China growth forecast to 7.6 percent, in the latest acknowledgement of slower expansion for the region's growth engine.
It also reduced the prediction for the world's second-biggest economy in 2014, expecting gross domestic product (GDP) growth to come in at 7.3 percent.
China's slowdown "will affect many other economies, notably the commodity exporters among the emerging market and developing economies", the IMF said.
The country has enjoyed decades of double-digit growth fuelled by exports and big-ticket investment projects.
But it recorded its slowest performance in 13 years in 2012, growing 7.7 percent, down from 9.3 percent in 2011 and 10.4 percent in the previous year.
Beijing's new leadership under President Xi Jinping and Premier Li Keqiang has stressed the need for the country to retool its growth model to one where private, consumer-led demand drives sustained, albeit lower, expansion.
Speaking at an Asia-Pacific business forum in Indonesia on Monday, Xi described the economy as being on a smooth and controlled slowdown, calling it "an intended result of our own regulatory initiatives".
However, the impact has already been felt with Indonesia's economy, Southeast Asia's biggest, projected to slow to 5.3 percent this year from 6.2 percent in 2012 due in part to sluggish investment and weaker demand for commodities from the resources-rich archipelago nation.
India's economy, meanwhile, is expected to grow 3.8 percent this year, the IMF said, as it lowered its earlier 5.6 percent growth forecast in July.
The new assessment deals a blow to India's embattled government, which is struggling to boost the sluggish economy ahead of elections due next year, hit by weaker investment, stubbornly-high inflation and a slumping rupee.
India's growth will rise to 5.0 percent in 2014, thanks to stronger exports and an easing of supply bottlenecks, the IMF said. But inflation is expected to hit 11.0 percent this year and 9.0 percent in 2014, driven by high food prices.
Solid domestic demand would help power the economies of some Southeast Asian nations, particularly Malaysia and the Philippines, while Thailand should pick up in the second half of this year after a slowdown, the IMF report said.