ADB cuts growth forecast for developing Asia

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HONG KONG, March 31 (AFP): The Asian Development Bank said today that growth in Asia's developing economies this year would fall to 3.4 per cent, citing the "bleak" short-term outlook for the region.
Growth will drop from 6.3 per cent last year and 9.5 per cent in 2007, the bank said, with 2010 expected to see growth of 6.0 per cent.
The slowdown will mean more than 60 million people in the region will remain mired in poverty, the bank said in its annual Asian Development Outlook.
"The short-term outlook for the region is bleak as the full impact of the severe recession in industrialised economies is transmitted to emerging markets," said ADB acting chief economist Jong-Wha Lee.
The bank was predicting as recently as December that the region's developing economies would grow at 5.8 per cent, highlighting how the crisis has rapidly spread across the region as demand for exports vanishes.
China, which has been the powerhouse behind the region's stellar performance in the last decade, will grow at 7.0 per cent this year, it said.
The figure is below China's official growth target of 8.0 per cent, seen as the minimum required to prevent mass joblessness that could lead to social unrest.
The report looks at the prospects for 44 jurisdictions stretching from the former Soviet states of Central Asia to some of the tiny Pacific islands, excluding developed countries such as Japan, Australia and New Zealand.
Several of the region's most export-dependent economies, including Hong Kong, Taiwan, South Korea, Malaysia, Singapore and Thailand, will contract in 2009, the report said.
ADB president Haruhiko Kuroda said the region had to fight any knee-jerk reactions that would place extra restrictions on global trade.
"Loud calls for protectionist policies are becoming worrisome," he said in his foreword to the report.
"As job losses in the major industrial countries continue, the protectionists voices may only get louder."
The bank welcomed the various stimulus packages that have been unveiled to battle the downturn, but said there was a "dearth of information" about how they would be implemented.
Despite the gloom, the ADB said, the region was in a much better position to tackle the slowdown than it was in the 1997 Asian Financial Crisis, which pummeled the region's currencies and economies.
Robert Prior-Wandesforde, a senior Asia economist at HSBC bank, said the current downturn was as severe as that in 1997 but that the region was expected to rebound more quickly.
"Being fundamentally in reasonably good shape when the region went in and with a lot of policy support to come, we expect (the region's economies) can bounce back sharply," he told AFP.
The ADB report stressed that Asia had to tackle its obsession with savings and shift to a more consumer-driven economic model.
"Strengthening domestic demand requires policies that develop social safety nets to encourage more private consumption," said Kuroda.
South Asia will also struggle in 2009, although it does not rely on trade to the same extent as southeast and east Asia.
Growth in India will fall to 5 per cent this year, down from 7.1 per cent in 2008, the report found.
Central Asia, where several countries derive much of their income from oil, will see growth drop to 3.9 per cent in 2009, from 5.7 per cent in 2008 and 12 per cent in 2007.