East Asia’s economic expansion to peak this year, says ADB

East Asia’s cycle of economic growth which began in the latter half of 2003 is expected to peak this year, an Asian Development Bank (ADB) report said yesterday.

Resurgent industrialized economies like Japan and the United States, strong regional trade and continued domestic demand in the region should push growth in East Asia to 7.3 percent this year, according to the Asia Economic Monitor (AEM) released by the Manila-based bank.

The figure is above the 6.6 percent forecast in December 2003.

The AEM is produced by the ADB’s Regional Economic Monitoring Unit and the report covers East Asia – including the 10 ASEAN countries, China, and South Korea.

East Asia’s expansion, however, is seen to slow to 6.5 percent next year as China’s economy, long the growth engine of the region, is expected to be moderate, the report said.

"This synchronized upswing in growth, which began last year, will reach its peak this year, close to its post-crisis high of 7.5 percent in 2000, and moderate somewhat in 2005," said Pradumna Rana, director of the ADB’s monitoring unit.

East Asia’s strong first half economic expansion was due to a combination of a rapid increase in exports coupled with domestic demand, the report said.

However, this robust growth, along with increases in world prices for oil and other commodities, have led to a gradual increase in inflation throughout the region.

The report cited continued high oil prices, increases in US interest rates and a hard landing for the Chinese economy as three "near-term risks" that could dim the outlook. –Ted Torres