Growth in East Asia to soften in 2007 with lower inflation - ADB
07 Dec '06
3 min read
Economic expansion in the newly industrialized economies - Hong Kong, China; Republic of Korea; Singapore; and Taipei,China - is expected to slide to 4.6 percent in 2007 from 5.3 percent this year, as they react to slower growth in exports to the PRC and the US.
According to AEM, there are six major risks to the regional growth outlook:
A sharper-than-expected slowdown in the US economy. A disorderly adjustment of global payments imbalances. Global financial market turbulence. A sudden oil supply shock. An insufficient slowdown of the PRC economy. Disruptions from non-economic events like avian flu pandemic or rising geopolitical tension on the Korean peninsula.
While the threat of high inflation in the US has not faded completely, the near-term risk of a sharper-than-expected slowdown, even the possibility of a recession, is higher now than in early part of this year, the report says.
AEM notes that despite the recent slower expansion in investment, medium-term risks persist that economic expansion in the PRC will not moderate to a sustainable pace, and it remains to be seen whether measures to rein in overinvestment are effective.
“To tackle structural vulnerabilities, governments in the region should focus on alleviating constraints on domestic investment,” Mr. Kawai adds. “In some cases, such as in the PRC the focus should be on enhancing the quality rather than the volume of investment.”
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