Growth in Asia to drop as global slowdown bites: ADB

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HONG KONG, Dec 11 (AFP): Growth in Asia's developing economies will slow to 5.8 per cent in 2009, down from 6.9 per cent in 2008, as nervous global investors scale back regional interests, the Asian Development Bank said today.
The global economic slowdown will also damage the region's crucial export market, and policymakers will need to act decisively to counter a more prolonged slowdown, the ADB said in a new report.
China, which has provided the driving force behind the region's stellar economic performance in the past five years, will grow at 8.2 percent next year, down from 9.5 percent, the Philippines-based bank said.
"Developing Asia -- which initially looked well positioned to weather the global crisis -- has come under increased pressure," the ADB said in a special report monitoring the crisis.
"As global investors scale back emerging market assets amid continued financial system de-leveraging, Asian equities and external funding conditions have been hurt."
The report said that despite a hefty build-up of foreign exchange reserves since the 1997 Asian financial crisis, the global credit crunch is testing Asian banks' ability to keep lending.
Economies that depend on exports are particularly vulnerable.
"Weakening demand for manufactured goods in major industrial countries means declining export orders from Asia, with knock-on effects for industrial production," the report said.
"Global trade volume is rapidly slowing down and is expected to barely expand in 2009, creating difficulties for regional economies that rely on exports for growth."