China and Japan will see slower growth in next two years, says IMF

In Southeast Asia, Vietnam is leading the fast-growing economies in the region, helped by rapidly growing exports.

Asia remains the engine of global growth despite a still weak global recovery, and an ongoing rebalancing in China, the International Monetary Fund said in its latest report on the region.

The IMF said the economies in Asia and the Pacific will remain strong despite global headwinds, logging annual growth of 5.3 percent this year and next.

Almost two-thirds of global growth will come from the region, the fund added, citing robust economic fundamentals in the region.

The Regional Economic Outlook for Asia and the Pacific said domestic demand in the region remained sanguine across most of the region though external demand was still sluggish.

The countries in the region are benefited by comparatively low levels of unemployment, growth in disposable income, lower commodities prices and macroeconomic stimulus.

"Of course, Asia is impacted by the still weak global recovery, and by the ongoing and necessary rebalancing in China," Changyong Rhee, Director of the Asia and Pacific Department at the IMF, said.

However, a detailed analysis of the individual economies showed that China and Japan, the two largest Asian economies, faced challenges. The report said China's growth will slow to 6.5 percent this year and 6.2 percent in 2017 from 6.9 percent in the last year.

Beijing faces an uphill task in keeping the growth momentum as it's midway through a politically sensitive and economically challenging rebalancing, trying to shift away from manufacturing and investment to services and consumption.

In Japan, the economy will expand nominally at a pace of 0.5 percent in 2016 but will record a contraction in 2017 as the effect of the widely anticipated consumption tax increase takes hold.

India will remain the fastest-growing large economy in the world, with GDP expected to increase by 7.5 percent this year and next, helped by low oil prices.

In Southeast Asia, Vietnam is leading the fast-growing economies in the region, helped by rapidly growing exports of electronics and garment manufactures. For the Philippines and Malaysia, growth is expected to remain robust, underpinned by resilient domestic demand.