Growth in East Asia set to slow
By Wang Yanlin |
May 24, 2012, Thursday
|
Print Edition
Print Edition
GROWTH in developing East Asia will moderate to 7.6 percent this year, mainly due to slower expansion in China, the World Bank forecast yesterday.
With the global economic turmoil expected to continue, the region should reduce its reliance on exports and find new sources of growth, according to the bank's latest East Asia and Pacific Economic Update.
"Risks emanating from Europe have the potential to affect the region through links in trade and finance," said Bert Hofman, the bank's chief economist for the East Asia and Pacific region. "The European Union, along with the United States and Japan, accounts for more than 40 percent of the region's exports, and European banks provide one-third of trade and project finance in Asia."
The external environment is likely to remain weak, Hofman said, so the best prospect for the region to maintain high rates of growth, job creation and poverty reduction was through rebalancing toward domestic demand and investing in productivity increases and further international integration.
Last month, the Washington-based bank cut its forecast of China's gross domestic product growth in 2012 to 8.2 percent from a previous 8.7 percent.
Weaker environment
China's gross domestic product expanded 8.1 percent from a year earlier in the first quarter, the slowest pace in nearly three years.
The bank attributed the slowdown in China to a weaker global economic environment and tighter domestic policies.
The developing East Asia and Pacific region (excluding Japan) reported an annualized growth of 8.2 percent last year, compared to almost 10 percent in 2010. China was a star performer in the region, as without it the region's growth figure last year would have been 4.3 percent.
In a report, also issued yesterday, Nomura said: "We continue to forecast the eurozone debt crisis reaching a peak in the second quarter and third quarter, and that only a sizable and pre-announced quantitative easing by the European Central Bank will keep the euro intact."
It described three tipping points where Asia's economies would be hit hard.
One is a decline in exports to the point where firms are forced to cut capital expenditure and jobs. Another is when financial markets melt down and cause significant negative financial wealth, confidence and bank collateral effects that can hurt consumption, investment and lending. A third can occur if there are serious net capital outflows.
With the global economic turmoil expected to continue, the region should reduce its reliance on exports and find new sources of growth, according to the bank's latest East Asia and Pacific Economic Update.
"Risks emanating from Europe have the potential to affect the region through links in trade and finance," said Bert Hofman, the bank's chief economist for the East Asia and Pacific region. "The European Union, along with the United States and Japan, accounts for more than 40 percent of the region's exports, and European banks provide one-third of trade and project finance in Asia."
The external environment is likely to remain weak, Hofman said, so the best prospect for the region to maintain high rates of growth, job creation and poverty reduction was through rebalancing toward domestic demand and investing in productivity increases and further international integration.
Last month, the Washington-based bank cut its forecast of China's gross domestic product growth in 2012 to 8.2 percent from a previous 8.7 percent.
Weaker environment
China's gross domestic product expanded 8.1 percent from a year earlier in the first quarter, the slowest pace in nearly three years.
The bank attributed the slowdown in China to a weaker global economic environment and tighter domestic policies.
The developing East Asia and Pacific region (excluding Japan) reported an annualized growth of 8.2 percent last year, compared to almost 10 percent in 2010. China was a star performer in the region, as without it the region's growth figure last year would have been 4.3 percent.
In a report, also issued yesterday, Nomura said: "We continue to forecast the eurozone debt crisis reaching a peak in the second quarter and third quarter, and that only a sizable and pre-announced quantitative easing by the European Central Bank will keep the euro intact."
It described three tipping points where Asia's economies would be hit hard.
One is a decline in exports to the point where firms are forced to cut capital expenditure and jobs. Another is when financial markets melt down and cause significant negative financial wealth, confidence and bank collateral effects that can hurt consumption, investment and lending. A third can occur if there are serious net capital outflows.
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