Asia's strong rebound from the global slowdown remains vulnerable to weak demand in Western economies, the International Monetary Fund said in a report yesterday.

"Asia remains more dependent on external demand than other regions. The global economy may stall, and then Asia would suffer the most," said Roberto Cardarelli, an IMF senior economist.

While much attention has been focused on China's own need to foster stronger domestic demand, reforms are needed across the region, the report said.

"There is a need to build up demand from within Asia so that it is driving growth, not only growth in the advanced economies," said Anoop Singh, director of the IMF's Asia-Pacific Department.

"A key step is to move away from investment and exports and toward consumption. I do believe this is recognized quite widely in China," Singh told reporters.

The IMF forecasts 7 percent growth for Asia in 2010, with expansion in China at 10 percent. China's economy expanded by about 12 percent in the first quarter of the year, exceeding expectations and raising concerns over possible overheating, especially in the property sector.

The IMF economists praised China's efforts so far to cool inflationary pressures from strong inflows of capital that have helped push up property prices and to a lesser extent share prices.

But China needs to go further in reforms aimed at reducing high levels of savings among both households and companies, increasing purchasing power among its consumers that can in turn drive further strong domestic growth.

China needs to beef up education and public health to reduce the burden on savings families use to pay for such services, among other financial reforms.

"This will require a mix of policies," Singh said.

Stable growth in the future will depend on coordinated policies in the region, the IMF report emphasized.