Strong growth, particularly out of China and India had rekindled hopes the region could decouple from slower-growing advanced economies and recover on its own.
"After a tough first quarter, Asia, in particular, is now set for a stronger performance than we anticpated earlier," Blanchard said. The IMF revised up forecasts for Asia by nearly 1 per cent for both 2009 and 2010.
Overall, the IMF said policies should remain supportive until growth resumes and deflationary risks dissipate. Where there is room, central banks should explore cutting interest rates further and signal that they intend to keep them low until a durable recovery is under way, it said.
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