WB, IMF warn of slower growth<\/p>\n
Agence France-Presse, Washington<\/p>\n
Economic growth in developing Asia is expected to slow down
\nthrough 2006 after the fastest expansion in a decade in 2004, the
\nWorld Bank said on Wednesday with a warning that tightening
\nglobal conditions could test the region's resilience.<\/p>\n
East Asian economies are poised to expand by 7.4 and 6.9
\npercent in 2005 and 2006 respectively after a blistering 8.3
\npercent last year while South Asian nations could grow 6.2 and
\n6.4 percent over the next two years after chalking up 6.6 percent
\nin 2004, according to the bank's annual Global Development
\nFinance 2005 report.<\/p>\n
The slower growth is in line with global trends.<\/p>\n
According to the Washington-based bank, rising interest rates
\nand high oil prices, combined with the waning of the fiscal
\nstimulus that has supported expansion in the recent past, should
\ncontinue to dampen world growth.<\/p>\n
As a result, global economic activity is projected to slow
\nfairly sharply in 2005 before stabilizing in 2006 and picking up
\nsomewhat in 2007, it said. Global economic growth hit 3.8
\npercent in 2004, with developing countries recording their
\nfastest growth in more than a decade, the report said.<\/p>\n
Francois Bourguignon, World Bank chief economist, warned of
\nthe risks of \"disorderly exchange rate movements, or of interest
\nrate increases\" that could dampen financial inflows.<\/p>\n
\"Developing countries need to prepare themselves for
\nadjustments, some of which could be sudden,\" he said.<\/p>\n
In South Asia, the bank said, notwithstanding a less benign
\nexternal environment, regional growth could expand by about 6.5
\npercent a year through to 2007.<\/p>\n
\"The more balanced growth that characterized the region in
\n2004 is expected to continue with domestic consumption and
\ninvestment providing the largest contributions to growth,\" it
\nsaid.<\/p>\n
Southeast Asian economies, whose growth fell from 7.8 percent
\nin 2003 to 6.6 percent last year, are expected to expand at a
\nslower pace of 6.2 percent this year, 6.4 percent in 2006 and 6.7
\npercent in 2007.<\/p>\n
In a separate occasion, International Monetary Fund chief
\nRodrigo Rato warned on Wednesday that the poor state of U.S.
\nfinances coupled with rising interest rates and high oil prices
\nare a menace to global growth.<\/p>\n
But it is not for the U.S. government alone to rebalance the
\nworld economy, Rato said in a speech at Georgetown University
\nhere ahead of the annual spring meetings of the IMF and the World
\nBank in mid-April.<\/p>\n
In particular, Europe and Japan must do more to shore up their
\nlegs of the global system to prevent growth being \"unduly
\ndependent on the United States and China\", the Fund's Spanish
\nmanaging director argued.<\/p>\n
There was also the need for \"greater exchange rate flexibility
\nin China and emerging Asia, supported by financial sector
\nreforms\", Rato added.<\/p>\n
The IMF has joined calls by the United States and EU for China
\nto relax its currency peg to the dollar, to address concerns that
\nChinese exporters are booming on the back of an artificially
\ncheap yuan.<\/p>",
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