Overseas News Service
WORLD BANK: CHINA STIMULUS TO SUSTAIN ASIA’S GROWTH
TOKYO - Growth in the economies of East Asia and the Pacific will slow this year because of the financial crisis but China’s multi-billion dollar stimulus will secure their status as the world’s fastest growing region, the World Bank said. Gross domestic product in developing East Asia will rise 5.3 percent this year, according to World Bank forecasts released on Tuesday. That is down from its previous estimate for 6.7 percent growth made in December and lower than last year’s 8 percent as the crisis crimps exports and domestic demand. Still, it may take longer for emerging countries to return to high growth, because the financial system in the developed world is still at risk of turmoil, the bank said, highlighting the difficulty all countries face in shaking off the global slump. “A return to stronger economic expansion in China next year should help support growth among the countries of the East Asia and Pacific region,” the World Bank said in its East Asia Update report. “But a sustainable recovery will ultimately depend on developments in the advanced economies. There are substantial downside risks for recovery and subsequent growth in developed countries.” From bad to worse
Vikram Nehru, the World Bank’s chief economist for East Asia said the continent’s economies were engulfed in a perfect storm. “In the last four months, things have gone from bad to worse in many of the advanced economies. The decline in production, the decline in the availability of credit, all of these factors are now leading to a substantial increase in unemployment,” he told journalists in a conference call. China will expand 6.5 percent this year, the World Bank said, down from an earlier forecast for 7.5 percent growth and compared with 9 percent growth last year, as export demand weakens in the United States, Europe and Japan. However, Beijing’s $587 billion stimulus will help it shift growth to personal consumption and spending on services, the World Bank said in its twice-yearly report. Government investment and banks’ small exposure to losses on the U.S. mortgage derivatives that sparked the global slump will also help China grow, it said. Nehru said that a recovery in the world’s third-largest economy would be reflected in a continued rise in the price of commodities, which, while still declining, had experienced a stabilisation. He warned that the sharp economic deterioration had led to millions of job losses across Asia, not yet fully reflected in official unemployment data. Growth in Indonesia will slow to 3.4 percent this year, down from a previous forecast for 3.8 percent, the report said. Indonesia may return to 5 percent growth as the government fiscal deficit last year was 0.1 percent of gross domestic product, meaning policy makers have room to launch fiscal stimulus.
ASIAN SUMMIT TO DISCUSS ROCKET AND RECESSION
BANGKOK - The global economic crisis and the security threat posed by North Korea’s rocket launch will grab much of the attention this weekend when Asian leaders gather in Thailand for their annual summit. It will be the first meeting of the leaders of Japan, China and South Korea since Sunday’s launch of what North Korea called a satellite, but which many countries saw as a thinly disguised test of a rocket capable of hitting the United States. The summit, which gets underway on Friday in the beach resort of Pattaya, also comes barely a week after G-20 members agreed a $1.1 trillion blueprint to revive the global economy. Other issues, ranging from energy and food security to climate change and world trade, will also be discussed by leaders of a region encompassing three billion people and which accounts for nearly 30 percent of global GDP. The 10 members of the Association of South East Asian Nations (ASEAN) span the political and economic spectrum: Brunei,...