The ADB’s Regional Economic Monitoring Unit said it now pegs the region’s 2004 economic growth at 7.3 percent compared with the 6.6 percent published in the December edition of the Asia Economic Monitor, a report produced by the think tank.
In a statement, the think tank said East Asia will grow stronger than initially expected thanks to robust growth in the US and Japan, higher domestic demand and buoyant intra-regional trade.
But the region would need to watch out for possible roadblocks that may cap this growth.
Future hikes in US interest rates, rising inflation in the region and a possible hard landing for China’s economy could hurt East Asia’s growth prospects, the think tank said.
The ADB unit said the region will grow a more moderate pace of 6.5 percent next year.
East Asia includes China, South Korea and the 10 members of the Association of Southeast Asian Nations. Asean includes Brunei, Cambodia, Indonesia, Laos, Myanmar, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.
The ADB think tank said its growth estimate for this year assumes oil prices of $35 to $40 a barrel.
If prices remain high next year, the growth projection for 2005 will have to be revised downwards, it said.
The think tank expects regional expansion in 2005 to slow from this year’s rapid pace as growth in major industrialized economies as well as China, the region’s main export market, slows to a more sustainable pace.
"Current indications are that the global economy will expand in 2004 at its most rapid pace in about two decades," the think tank said.
Excluding China, East Asia’s economy this year is forecast to grow 5.7 percent, exceeding the 5.2 percent estimate in December and 1.7 percentage points above the actual growth rate in 2003, it said.
In 2005, East Asia, exChina, is forecast to grow at a more moderate rate of 5.1 percent.
"This synchronized upswing in growth, which began last year, will reach its peak this year, close to its post-crisis high of 7.5 percent in 2000, and moderate somewhat in 2005," Pradumna B. Rana, director for the ADB think tank, said in the statement. (Dow Jones)
