MANILA, July 9: East Asia is on track to post 5.8 per cent economic growth this year, slightly better than earlier forecast, despite uncertainty surrounding the US recovery, the Asian Development Bank (ADB) said on Tuesday.
The Manila-based bank raised its growth forecast for the region by 0.6 percentage points, saying the global trade recovery and strengthening domestic demand should lead to more balanced economic expansion.
It conceded in its quarterly Asian Economic Monitor (AEM) report that “risks to the US recovery have increased” with a recent stock market slide, lower retail sales in May and softening consumer sentiment in June.
“Yet so far, these risks appear to be manageable and are unlikely to derail the moderate recovery in the US forecast in the April AEM.”
East Asia’s exports fell last year, due in a large part to recession in the United States and Japan and the September 11 incident. Economic growth in the region subsequently slid to 4.3 per cent, the lowest rate since 1998 during the Asian crisis.
“With a moderate recovery still the most likely outcome for the US, GDP growth for Japan revised upwards, and growth prospects unchanged for Europe, East Asia continues to face a favourable external environment,” it said.
China’s economic growth should lead the region this year at 7.4 per cent, rising to 7.7 per cent in 2003. South Korea’s projected 6.1 per cent growth this year, followed by a 6.0 per cent expansion in 2003, would move it closer to its historical trend, it said.
The Association of Southeast Asian Nations (ASEAN), excluding Brunei and Myanmar, should see average growth of 3.8 per cent this year, further strengthening to 4.7 per cent the following year, it said.
The countries included in the ASEAN forecast are Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
“The more open economies are picking up at a faster pace. This is to be expected as the resurgence in growth is driven primarily by a rise in global demand for the region’s exports, although domestic demand has played a complementary role,” it said.
ADB had forecast in April that East Asia would see a moderate rebound from the economic slowdown in 2001.—AFP