TOKYO, Dec 13 (KUNA) — Economic growth in emerging East Asia will slow to 8.0 percent in 2008 from 8.5 percent this year as expansion in key industrialized nations moderates amid volatility in financial markets and rising oil prices, the Asian Development Bank (ADB) said Thursday.
“Even though growth slows in emerging East Asia, inflation is rearing its head in many economies and that price pressures are likely to remain in 2008,” the Manila-based bank said in its latest Asia Economic Monitor report.
Emerging East Asia comprises China, Hong Kong, Taiwan, South Korea and the 10 members of the Association of South East Asian Nations (ASEAN) — Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
Growth in China, the region’s growth engine, is likely to slow down to 10.5 percent in 2008 from an estimated 11.4 percent this year, if government measures to cool the economy begin to take hold, the ADB said. Growth in the ASEAN is also expected to edge down to 6.1 percent next year from 6.3 percent in 2007.
The ADB warned that a hard landing of the US economy might impact East Asia’s growth. “So far, the turmoil in the US subprime market has not spilled over into emerging East Asian markets and economies, but the region remains vulnerable as its banking sector expands into new lines of businesses and exposes itself to unknown risks,” it said. “If we take into account the total share of intraregional trade that is destined for Japan, Europe and US, the share of these markets in the region’s total exports is still over 60 percent.” The sharp rise in asset prices is also at risk of corrections if swings in global financial markets spread to the region, the report said. “Changes in asset prices could impact growth through wealth effects and higher cost of capital.” The bank also recommended policymakers continue to enhance risk management systems, strengthen information disclosure policy and upgrade supervisory framework to better assess potential vulnerabilities.
The ADB is a multilateral development finance institution dedicated to reducing poverty in Asia and the Pacific. Established in 1966, it is now owned by 67 members, mostly from the region, as well as the US, the UK and Germany.