East Asian economy to grow 5.8% in 2003: JETRO

East Asian economy to grow 5.8% in 2003: JETRO

Agence France-Presse, Tokyo

East Asian economies, excluding Japan, are forecast to grow 5.8 percent in 2003, the same rate as this year, as brisk investments offset slumping exports, a government-run trade body said here Wednesday.

But the Japan External Trade Organization (JETRO) warned it may cut the projection if the impact of the Oct. 12 terrorist attacks on Indonesia's Bali island continued to hurt Southeast Asian economies, or the United States launched a military campaign against Iraq.

"The 10 economies are to mark moderate growth of 5.8 percent in 2003, unchanged from this year," said Mitsuru Toida, director- general at JETRO's Institute of Developing Economies.

"Investment is expected to recover in the region next year while exports are seen to be weaker than this year in some countries, including China.

"But the forecast will need a revision if tension in the Gulf increases or the aftermath of the terrorist attack in Bali is prolonged."

The regional economic outlook covered China, Hong Kong, Singapore, South Korea, Taiwan, Indonesia, Malaysia, the Philippines, Thailand and Vietnam.

Indonesia's economy is seen inching up to 3.2 percent in 2003 from 3.0 percent this year.

"In 2003, Indonesia will see investment and exports bounce back to a positive increase rate of 2.4 percent and 2.8 percent, respectively," JETRO said in the report.

"However, private consumption and government consumption in 2003 will increase by slower rates."

Steady domestic demand would help China grow 7.6 percent, just slightly lower than the 7.9 percent rate expected in 2002, the institute said.

South Korea will see private spending slow, but nevertheless should achieve sound economic expansion of 5.5 percent, compared with 6.0 percent growth expected this year.

Private investment will recover in Taiwan and Singapore, with these economies forecast to grow by 3.3 percent and 3.2 percent, respectively.

In Hong Kong, both private investment and private consumption will increase after easing this year, but economic activity will remain slow at just 1.7 percent, compared with 1.2 percent in 2002.

Indonesia, Malaysia, the Philippines, Thailand and Vietnam will expand by a combined 4.6 percent, up 0.5 percentage points from 2002.

In Thailand and Malaysia, strong exports and investment will support growth of 5.0 percent and 5.8 percent, respectively. Thailand is seen to rise 4.6 percent this year, with Malaysia at 3.9 percent.

Growth in the Philippines is projected at 4.2 percent, unchanged from 2002. In Vietnam, exports will continue trending upwards to fuel continued strong growth of 7.0 percent next year.

In the outlook, JETRO also said the yen's exchange rate was expected to be 120 against the dollar, while the East Asian currencies are seen to remain stable. The combined inflation rate for the region is expected to be around 1.6 percent, it said.