World Bank expects economic upswing in East Asia outside Japan in
World Bank expects economic upswing in East Asia outside Japan in 2004
Daniel Lovering Associated Press Bangkok, Thailand
The World Bank is predicting robust economic growth of 6.3 percent this year in East Asia - excluding Japan - thanks to rising exports, low interest rates and investment in China, Vietnam and Thailand.
Fueled by recoveries in the United States and Japan, demand for East Asian exports and a high-tech sector rebound, the growth would be the strongest since the global downturn of early 2000, World Bank Regional Vice President Jemal-ud-din Kassum said in a statement released on Tuesday.
The economic momentum began gathering last year and "by the end of 2003, the low- and middle-income countries of the region were growing at a combined rate of 7.6 percent, their fastest rate since 1996," he said, citing a twice-yearly report released in Washington.
That economic expansion, unseen since before the regional financial crisis of 1997-98, benefited the poor, lifting the incomes of some 49 million people above US$2 per day.
Much of the region's growth is attributable to China, which saw its manufactured goods exports surge by 40 percent in 2003, with first quarter 2004 estimates showing a steady upward trend.
China also remains a major destination for the relocation of global factories, creating jobs and boosting incomes at a sizzling pace. However, Chinese authorities are taking steps to rein in growth to prevent overheating, which could lead to a production glut
Intra-regional trade has accounted for about 70 percent of East Asia's growth for the past three years, but the Bank said it expects this trade volume to diminish as China cools its economy.
"Although it is true that slower growth in China would hurt other economies in the region, our view is that the impact would be modest," Homi Kharas, World Bank chief economist for Asia and the Pacific, was quoted as saying.
The more significant risk to the region, he said, "comes not from slower growth in China but from a hard landing, which will take skillful and coordinated policymaking to avoid."
Net foreign and domestic investment in six countries - China, Indonesia, South Korea, Malaysia, the Philippines and Thailand - was estimated to have jumped to around $33 billion, from a net outflow of $9 billion in 2002.
Foreign investment in the six countries was about $60 billion in 2003, an increase of roughly $1.5 billion over the previous year, with the overwhelming majority - some $53.5 billion - going to China and just $6.5 billion to the other five economies.
Investment has been particularly strong in Vietnam because of ongoing economic reforms, while Thailand saw investment spike with growth of nearly 12 percent, unlike several other crisis-hit countries that achieved less than 5 percent growth.
Regional investment is expected to continue rising due to low interest rates, the widespread availability of credit and higher corporate profits and productivity.
Prices for regional commodities, including cotton, rice rubber, metals and edible oils such as palm oil, rose by 10 percent to 20 percent in 2003 and continue to show signs of increasing, helping several of the region's developing countries.