East Asia Developing Economies to Grow by 7.8%: WB
Economies of East Asia are expected to grow by 7.8 percent on average in 2006.
The World Bank said economies of East Asia are expected to grow by 7.8 percent on average in 2006 after they grew by 8.2 percent in 2006.
In his latest East Asia Update on the region's economy, the bank said East Asia's economies delivered another solid performance in 2005, now surpassing Europe as the region most openfor trade in the world.
Growth in East Asia was broad based for the second year in a row, exceeding 4 percent in each economy, except East Timor, according to the report. Even in many Pacific Island economies, per capita growth has been positive thanks to improved macro-economic stability, the bank said.
This impressive performance was in spite of rising oil prices -- the highest in 25 years -- rising interest rates, continued worries over the financing of the United States' current account deficit and over the prospect of the spread of avian flu, it said.
In the first half of 2005, high oil prices, slower growth in China, and slowing high-tech exports briefly reduced growth acrossthe region. But from mid 2005 economies have rebounded, boosted bystrong export growth to China, Japan and other regional economies as well as the United States, it said.
Homi Kharas, Chief Economist for East Asia and the Pacific, said "East Asia's exports surged to over 2 trillion US dollars last year, and this powered the region's growth.
Strong growth inturn is having a dramatic impact on poverty reduction".
He said 580 million people in the region still live on less than 2 US dollars a day, this number has been falling by about 50 million people each year over the past five years.
On a more cautionary note, the report noted that investment in the region, which had rebounded in 2004, slowed in 2005, and capital flows in many economies reversed course last year, including short-term flows, which fell due to the narrowing of theinterest-rate gap between Asia and the United States.
The report said East Asia has now surpassed Europe as the most open region in the world with exports almost doubling over the past three years, but this level of openness also exposes economies to some new challenges.
Challenges like checking the potential spread of avian flu, particularly among humans, are bringing countries and regions together, most recently in Beijing, to collaborate on steps to prepare, control, and prevent future outbreaks among poultry, it warned.
"So far the impact of bird flu outbreaks has been isolated to the poultry sector and some farm households and has not spilled into the overall economy." said Milan Brahmbhatt, lead economist and author of the report.
The report said the region's economies have much to gain from asuccessful completion of the Doha round of trade talks, but increased trade also means some domestic challenges, including boosting efforts to innovate and build skills, improve the climatefor investment, and better protect vulnerable segments of the society.
It said the East Asia and Pacific region is already among the most vulnerable to natural disasters.
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