Domestic demand is forecast to remain strong, supported by healthy labour market conditions, low interest rates, and more recently, the fall in oil prices.
Exports will continue to benefit from the recovery in advanced economies and weaker exchange rates in some countries, despite the slowdown in some major emerging markets and the trend decline in exports' responsiveness to partner country demand, reflecting greater on-shoring of production.
Growth momentum in the largest economies in Asia and the Pacific, while good overall, is expected to remain mixed. China's economy is slowing to a more sustainable pace, with GDP projected to expand by 6.8 per cent in 2015 and 6.3 per cent in 2016 as the correction in the real estate sector continues to compress investment.
Growth in Japan is expected to recover to 1 per cent in 2015 and 1.2 per cent in 2016, buoyed by consumption and exports. Thanks to recent policy reforms and lower oil prices, India will be one of the fastest growing economies, expanding by 7.5 per cent in 2015 and 2016.
Across most of the region, lower commodity prices are expected to boost incomes and reduce inflation, although commodity exporters such as Australia, Indonesia, Malaysia, and Mongolia will be adversely impacted.
Sharp exchange rate swings in advanced economies, reflecting in part divergent monetary policies, are also being felt within the Asia and Pacific region.
Lower-than-expected growth in China and Japan could spill over to other economies in the region.
Volatile global financial conditions could be disruptive, particularly where debt levels are high. In addition, potential growth has moderated across much of the region, reflecting weaker productivity gains and labour force aging.
On the upside, lower energy prices could present a larger boost to growth while also creating room for fiscal reforms, as we have already seen in a number of countries.
While affected by the downturn in the global commodity cycle, New Zealand's economy is expected to remain strong through 2016, driven by strong business activity as evidenced by a booming housing market in Auckland and high net immigration, as well as rebuilding after the Canterbury earthquake.
Given the wide diversity across the region, no one-size-fits-all advice holds. In general, current settings for policy interest rates are broadly appropriate given prevailing economic conditions and inflation rates.
But going forward, higher policy rates may be needed in some cases in the event of capital flow reversals to reinforce external stability.
On the other hand, in Japan, where interest rates are already close to zero, aggressive stimulus through quantitative and qualitative easing should continue, in order to achieve positive inflation on a durable basis, supported by progress on structural reforms.
In countries where public and private debt is high, gradual fiscal consolidation would strengthen resilience.
The decline in oil and food prices provides an opportunity to phase out budget subsidies and make room for infrastructure and social spending, including on health and education that can also help reduce income inequality.
Potential growth has slowed across much of Asia. The decline reflects primarily decelerating total factor productivity, which may be attributed in part to slowing gains from participating in global value chains.
New Zealand has benefited from rising terms of trade in the past decade, and a shift in trade towards Asian and Pacific economies. However, as trade partner growth slows, productivity in non-agricultural tradeables will need to rise to maintain the growth momentum.
Over the medium term, Asia would also benefit from deeper intra-regional financial integration, which has lagged trade integration. Further financial integration holds the promise of more efficient allocation of regional savings to meet the region's large investment needs while also supporting financial inclusion.
• Changyong Rhee is director of the IMF's Asia and Pacific department.
