New Delhi: India and China will witness steady high growth rates of 8.8 and 10 per cent respectively, in 2010 and Asia will continue to lead the global recovery despite challenges of inflation and excessive capital flows, according to the latest communication by International Monetary Fund (IMF) officials.

Addressing the press, Anoop Singh, IMF Director of Asia-Pacific department, said that by the end of 2009, output in most of Asia returned to pre-crisis levels even in those economies that were hit hardest by the crisis. After the deepest recession in recent history globally, it was a known fact that Asia was leading this global recovery. In fact, activity in Asia rebounded fairly swiftly over the past year and in the first quarter of 2010.

A common trend witnessed over Asia has also been that strong recovery with upturns though varied, was witnessed by both economies such as China, India and Indonesia, having orientation towards domestic markets and export-oriented nations too.

On the matter of rising inflation in South Asia, he added that output gaps in much of Asia had begun to narrow. Inflation had become an issue primarily with contributions from rising food and energy prices.

Reserve Bank of India (RBI) Governor D Subbarao, who was present at the steering committee meeting of the 186-nation International Monetary Fund (IMF), also said that current estimates of real GDP in India had grown at 7.2 per cent during the just completed fiscal year 2009-10, up from 6.7 per cent during 2008-09.

He further added that in view of the inflation risk, RBI had begun a calibrated exit from the expansionary monetary policy, while the central budget of 2010-11 had begun the process of fiscal consolidation by planning reductions in the revenue and fiscal deficits.

The International Monetary and Financial Committee (IMFC) said in a communiqué that while the financial sector was in the middle of a global crisis, "strengthening financial regulation, supervision, and resilience remains a critical but as yet incomplete task.

We agree to redouble efforts to forge a collaborative and consistent approach for a stable global financial system that can support the economic recovery."