UN tips 6.2% growth in Asia-Pacific

UN tips 6.2% growth in Asia-Pacific

Agence France-Presse, Bangkok

Economies in 38 developing countries in the Asia Pacific region should grow by 6.2 percent next year, on level with this year's 6.3 percent, the UN's regional body said on Wednesday.

Oil prices were expected to remain high and volatile in 2006 at around US$50 a barrel, while increasing imbalances between low savings in the United States and high savings in Asian countries needed to be addressed, it said.

Members should also create an emergency health fund to help poorer countries combat the deadly threat of bird flu, the UN's Economic and Social Commission for Asia and the Pacific's (ESCAP) said in a report.

"Prospects for the ESCAP region for 2006 indicate that output growth is likely to maintain its current resilience, while price pressures should abate despite continuing high energy and commodity prices," the report said.

"Within the ESCAP region, Southeast Asia, South and Southwest Asia and the Pacific island countries should experience a slight acceleration in their GDP growth rates in 2006."

North and Central Asia, East and Northeast Asia and the developed countries are likely to experience a mild deceleration, the report added.

Inflation within developing countries in the region was estimated at 4.8 percent in 2005, and is expected to decline slightly to 4.4 percent next year.

In Southeast Asia, real GDP growth was forecast at 5.1 percent this year, rising to 5.4 percent next year, while inflation was tipped to fall to 4.9 percent next year from 5.2 percent.

Growth in East and Northeast Asia for 2005 was estimated at 6.6 percent, falling to 6.4 percent in 2006, while inflation was forecast to stay flat, to 2.3 percent next year from 2.2 percent, the report said.

UNESCAP calculations predict for every $10 a barrel increase in oil prices lasting six months, GDP growth in the region declines 0.5 percent, while inflation increases 0.5 percent, executive director Kim Hak-Su told reporters.

"Oil importing economies certainly would be most affected, and policy responses are needed, among others maybe phasing out oil subsidies ... and more incentives for energy efficiency and conservation," he said.

The report urged Asian economies to use the region's strong rate of savings to finance projects such as building much-needed physical infrastructure.

It also recommended a new fund to offset the effects of bird flu, which has cost the Asian poultry industry losses of about $10 billion since the H5N1 virus was found in late 2003, affecting mostly small farmers with no alternative income.

An emergency health fund would mean richer countries could pool their money to assist poorer countries such as Cambodia and Laos to battle the disease, Kim added.

Asked what economic matters would be priorities for 2006, Kim said oil prices, followed by the threat of avian influenza.

"Avian flu it's uncertain but (if) it will happen, it will kill our tourism," he said.