'Asia-Pacific growth to slow down'
Xiao Xin | Saturday, 7 June 2008
Economic growth in the Asia-Pacific region will slow to 3.7 per cent year-on-year this year from 4.9 percent last year, while inflation will become a bigger concern, a major regional think-tank has forecast.
China will continue to drive the region's economy and grow by 9.6 per cent this year, down from 11.4 per cent last year, according to the report by the Pacific Economic Cooperation Council (PECC). It will account for more than 40 per cent of Asia-Pacific economic growth.
The expected recovery of the US economy, meanwhile, may start towards the end of this year, although it is "by no means assured", said the report.
The economic growth of the Asia-Pacific was previously forecast at 4.9 per cent, according to the report.
"The revision to our forecast comes from increased pessimism about the health of the US economy, which is forecast to grow at only 1 per cent this year," the report said.
"The knock-on effects of the slow-down in the US economy and the turmoil in financial markets are seen in downward revisions for growth in most Asia-Pacific economies."
Japan's economic growth this year is expected to slow further to 1.6 per cent after it slowed to 2.1 per cent last year from 2.4 per cent in 2006.
The weakening performance is due largely to the reduced contribution from the external sector, which will decrease from 1.1 per cent in 2007 to 0.7 per cent as a result of the slowdown in the US, a major market for Japanese exports.
The rest of the region follows a similar pattern to the big three Asia-Pacific economies except for South American economies (Chile, Ecuador, Colombia, and Peru) where growth is forecast to increase in 2008 to 6.7 per cent from last year's 6 per cent, buoyed mostly by strong commodities exports, according to the report.
"There is evidence that the impact of the sharp slowdown in the US is somewhat muted due to the increased importance of consumption in the region," the report said, noting that it remains a drag on growth for much of the region.
"While slowdown in growth weighs heavily on policymakers' minds, it is the specter of inflation that is causing the biggest headaches," the PECC said, forecasting that it may increase to 3.6 per cent this year compared with 2.7 per cent last year in the region.
The organisation warned that China's inflation growth could hit 6 percent this year, well above the official target of 4.8 per cent. In Indonesia, it could soar to 11.7 per cent this year, nearly twice that of 6.6 per cent last year.
In Southeast Asia, consumer inflation is set to almost double from 3.2 per cent last year to 6.2 per cent this year.
The report said one key development that needs to be watched is whether this year represents an end to the deflationary cycle in Japan, whose CPI inflation is creeping upwards from 0.1 per cent last year to a forecasted 0.6 per cent this year.
Inflation in the US is set to increase to 3.9 per cent due to the sharp increase in oil prices before dropping back to 2.6 per cent in 2009 in line with an expected drop in the price of oil next year, the report said.
The PECC forecast that the region as a whole may rebound with a forecasted growth of 4.4 per cent.
China's growth may rebound to 10 per cent while the US economy is expected to recover and grow at 2.5 per cent.
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China Daily
China will continue to drive the region's economy and grow by 9.6 per cent this year, down from 11.4 per cent last year, according to the report by the Pacific Economic Cooperation Council (PECC). It will account for more than 40 per cent of Asia-Pacific economic growth.
The expected recovery of the US economy, meanwhile, may start towards the end of this year, although it is "by no means assured", said the report.
The economic growth of the Asia-Pacific was previously forecast at 4.9 per cent, according to the report.
"The revision to our forecast comes from increased pessimism about the health of the US economy, which is forecast to grow at only 1 per cent this year," the report said.
"The knock-on effects of the slow-down in the US economy and the turmoil in financial markets are seen in downward revisions for growth in most Asia-Pacific economies."
Japan's economic growth this year is expected to slow further to 1.6 per cent after it slowed to 2.1 per cent last year from 2.4 per cent in 2006.
The weakening performance is due largely to the reduced contribution from the external sector, which will decrease from 1.1 per cent in 2007 to 0.7 per cent as a result of the slowdown in the US, a major market for Japanese exports.
The rest of the region follows a similar pattern to the big three Asia-Pacific economies except for South American economies (Chile, Ecuador, Colombia, and Peru) where growth is forecast to increase in 2008 to 6.7 per cent from last year's 6 per cent, buoyed mostly by strong commodities exports, according to the report.
"There is evidence that the impact of the sharp slowdown in the US is somewhat muted due to the increased importance of consumption in the region," the report said, noting that it remains a drag on growth for much of the region.
"While slowdown in growth weighs heavily on policymakers' minds, it is the specter of inflation that is causing the biggest headaches," the PECC said, forecasting that it may increase to 3.6 per cent this year compared with 2.7 per cent last year in the region.
The organisation warned that China's inflation growth could hit 6 percent this year, well above the official target of 4.8 per cent. In Indonesia, it could soar to 11.7 per cent this year, nearly twice that of 6.6 per cent last year.
In Southeast Asia, consumer inflation is set to almost double from 3.2 per cent last year to 6.2 per cent this year.
The report said one key development that needs to be watched is whether this year represents an end to the deflationary cycle in Japan, whose CPI inflation is creeping upwards from 0.1 per cent last year to a forecasted 0.6 per cent this year.
Inflation in the US is set to increase to 3.9 per cent due to the sharp increase in oil prices before dropping back to 2.6 per cent in 2009 in line with an expected drop in the price of oil next year, the report said.
The PECC forecast that the region as a whole may rebound with a forecasted growth of 4.4 per cent.
China's growth may rebound to 10 per cent while the US economy is expected to recover and grow at 2.5 per cent.
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China Daily