Asia remains fastest growing area: ADB

Asia remains fastest growing area: ADB

Associated Press, Manila, Philippines

Asia will remain the world's fastest growing area this year
despite the adverse effects of SARS and the war in Iraq, with
growth likely to accelerate in 2004 as global demand recovers,
the Asian Development Bank said on Tuesday.

Asia, excluding Japan, will grow 5.3 percent this year, the
ADB said, sticking to its April forecast despite the SARS
epidemic then hitting the region. That's a slowdown from the
region's 5.6 percent growth in 2002, but the bank expects growth
to pick up to 6.1 percent in 2004, better than its April forecast
of 5.9 percent.

This year's relatively strong outlook "is all the more
remarkable" given the weak first half of 2003 in major industrial
countries, including the United States and euro zone nations, the
ADB said in the semiannual update of its Asian Development
Outlook.

Severe acute respiratory syndrome, which killed more than 900
people of the 8,400 sickened worldwide, dealt the severest damage
to the region's economy in 2003, the ADB said.

Nonetheless, the Manila-based lender raised its forecasts for
China and Hong Kong - epicenters of the flu-like virus - as well
its forecasts for Thailand and Central Asia.

But the ADB cut its outlooks for Singapore, also battered by
SARS, and South Korea, which has had to contend with the fallout
of a consumer-credit crunch, nationwide strikes and a devastating
typhoon.

SARS cut regional demand and business revenue nearly US$60
billion, while governments spent a staggering 18 billion - $2
million per person infected - containing the outbreak, the ADB
said. The biggest loss was in tourism and retail.

"Fortunately, most governments involved saw the need for
determined action to bring SARS under control fast - and they
were largely successful," the bank said.

While the bank doesn't discount the possibility of a SARS
recurrence, it said the impact should be milder because
governments are now better equipped to deal with such epidemics
and travel-monitoring mechanisms remain in place.

The theme of the first half of 2003 was the continued, rapidly
increasing importance of China as a driver of regional trade and
growth and the substantial accumulation of foreign-exchange
reserves by various countries, the ADB said.

China has emerged over the past two years as a major export
market for other countries in Asia, and this trend accelerated in
the first half of 2003.

"If these trends continue and regional economies continue to
focus on policies to achieve faster growth in domestic demand,
Asia's economic outlook should become less dependent on economic
developments in the major industrial countries," the ADB said.

Despite SARS, China's strong foreign investment inflows and
soaring exports will help the economy grow 7.8 percent this year,
slightly down from last year's 8.0 percent, the ADB said, but
better than the bank's April forecast of 7.3 percent. It raised
China's 2004 outlook to 7.9 percent from 7.6 percent.

Similarly, despite falling into a recession in the first half,
Hong Kong's economy will likely expand 2.1 percent this year, the
ADB said, shading up its earlier forecast of 2 percent growth and
predicting the city's economy will accelerate to 4.8 percent next
year, an upgrade from April's forecast of 4 percent growth.

Aside from a recurrence of SARS, the bank said other risks to
Asia's growth are the lingering threat of terrorism and the
continued uncertainty in global recovery.