The World Bank has raised its 2005 economic growth forecast for
East Asia to 6 percent from a November estimate of 5.9 percent,
citing stronger-than-expected expansion in China.
"China has confounded all of our expectations," Homi Kharas, the
Washington-based lender's chief economist for East Asia and the
Pacific, said in a telephone interview. "China continues to be the
driver of growth."
China's economy will probably expand by 8.3 percent, faster than
an earlier projection of 7.5 percent, the World Bank said in a
twice-yearly report on the region. The lender, whose definition of
East Asia excludes Japan and the Indian subcontinent, cut its
growth forecast for South Korea to 4.2 percent from 4.4 percent and
raised its Indonesia estimate to 5.5 percent from 5.4 percent.
Economic growth in China reached an eight-year high of 9.5
percent last year and that pace of expansion was maintained in the
first quarter, official figures show. That is helping sustain
demand for Indonesian palm oil, South Korean computer chips and
Philippine mobile phone parts as high oil prices curb spending in
the United States, Europe and Japan.
East Asia's exports rose by 26 percent last year to US$1.8
trillion, the biggest gain in more than 20 years, boosted by
China's demand for raw materials and energy. China, which accounted
for 29 percent of East Asian economies' export growth in 2004, will
probably import 16 percent more this year, the World Bank
forecast.
Sustainable growth
The International Monetary Fund raised its 2005 growth forecast
for developing Asia to 7.4 percent from 6.8 percent in its April 13
World Economic Outlook. The Asian Development Bank lifted its
projection for East Asia to 6.7 percent from 6.4 percent on April
6.
East Asia's economy expanded by 7.2 percent in 2004, the fastest
pace since the Asian financial crisis of 1997, as exports,
consumption and investment "started firing together," the World
Bank said. This year's projected slowdown to 6 percent growth
reflects cooling demand in the world's largest economies, it
said.
"That's a good sustainable growth rate because it comes from a
balanced expansion in exports, incomes and investment," Kharas said
in a statement accompanying the report. "Europe and Japan have both
slowed. Oil prices are much higher and that's knocked off about 1
percent from the region's growth rate."
The World Bank said it expects crude oil prices to average US$42
a barrel, up from a November projection of US$36 a barrel. The
December 26 tsunami will have a minor impact on overall growth in
the two most seriously affected economies of Indonesia and
Thailand, the World Bank report said.
Foreign exchange reserves in the region, excluding Japan, rose
by US$300 billion to US$1.4 trillion last year.
(China Daily April 28, 2005)