East Asian economies likely to remain robust despite US subprime crisis

FE Team | Published: November 16, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

WASHINGTON, Nov 15 (Xinhua): East Asian economies are likely to remain robust in 2008 despite growing concerns about the US subprime crisis and increasing global oil prices, the World Bank said in its East Asia and Pacific Update released here yesterday.
The report finds that for the first time, the number of poor people living below 2 dollars a day in East Asia has fallen below 500 million, down from 1 billion in 1990.
The six-month report on the region's economic and social health expects growth in emerging East Asia to exceed 8 per cent in 2007 for a second year and to go down slightly in 2008.
The region includes Chinese mainland, Indonesia, Malaysia, the Philippines, Thailand, Vietnam, the Republic of Korea, Hong Kong and China's island province of Taiwan.
Although East Asian exports to the United States have already slowed, the report said, more buoyant investment and consumption in China and other countries have allowed growth to remain strong and even pick up this year.
China is estimated to grow by 11.3 per cent in 2007 and slow down to 10.8 per cent in 2008.
The stronger growth dynamic extends to middle-income economies in South East Asia and continues to run at solid 7 per cent to 10 per cent rates in low-income economies of the region including Cambodia, Laos, Mongolia and Vietnam, the report said.
Growth is also beating historical trends in some of the small Pacific Island economies due to high commodity prices. But the economic performance of some of these countries continued to suffer from social tensions and political instability, it said.
New highs for oil prices will test the solidity of the East Asian and global economic expansions in 2008, the report cautioned.
Crude oil prices moved to well above 90 dollars in early November, underpinned by demand and supply factors. The report calculates that an average oil price of 90 dollars in 2008 would be associated with an income loss in East Asia of a little over 1 per cent of gross domestic product.