WB forecasts continued growth in East Asia

WB forecasts continued growth in East Asia

WASHINGTON (AFP): East Asia should enjoy high economic growth
into the next century but must commit itself to ending poverty
and inequality in income distribution, the World Bank said
Monday.

A recent slump in certain countries reflects temporary
phenomena and does not point to economic decline, the Bank found
in its latest regional forecast.

"Some economies are going through adjustments but the
underlying growth momentum remains extraordinarily strong."

The study stressed that contrary to fears in certain quarters
that robust East Asian expansion can hurt job growth in the West,
"rapid East Asian growth is good for the world."

"When East Asia's exports grow, so do its imports."

While the region, excluding Japan, accounts for only eight
percent of global gross domestic product, it takes in 17 percent
of world imports and is expected to account for more than 25
percent in global imports between now and the end of the decade.

The Bank acknowledged that such growth is most beneficial to
skilled workers outside the region but insisted that "recent
research indicates that on balance rising trade with East Asia
helps, not hurts, unskilled workers as well."

The report said growth in the region since 1990 has averaged
nine percent, up from seven percent in the previous decade.

Concern was recently raised by a fall-off in double digit
export growth in China, South Korea, Singapore and Thailand.

Deficits

In addition, according to the World Bank, current account
deficits exceeded eight percent of gross domestic product in
Malaysia and Thailand. The stock market has fallen 20 percent in
Korea this year and 30 percent in Thailand.

But the Bank determined that the bad news was largely
"cyclical," notably as the export slowdown reflected slumping
computer chip sales -- which it said are now picking up.

Current account deficits were driven by heavy inflows of
private capital rather than low domestic savings, according to
the Bank, adding that most countries had managed to cool down
overheated growth.

But the Bank cautioned that despite prospects for sustained
impressive expansion, East Asia remains a low income region, one
where 80 percent of the population has per capital income of less
than US$600 a year.

For that reason, and in the face of "growing concern over
income distribution, the Bank urged that governments give
priority to rural development, the provision of social services
and the inclusion in the economic boom of those at risk of being
left behind.

In addition, the Bank recommended:

-- Increased investment in infrastructure to relieve
bottlenecks.

-- Reforms to state enterprises and the financial sector.

-- Upgrading the quality and productivity of labor.

-- The development of mechanisms to manage lifetime health and
unemployment risks in the face of rapidly aging populations.

-- Making environmental protection a priority.

"The so-called East Asian 'miracle' is not and never has been
on automatic pilot," according to the Bank.

"It has been based on continuing policy and institutional
change to meet the evolving demands of development."