Emefrging East Asia grew at just over 6 percent in 2005 as the
region's economies countered a series of threats, including rising
oil prices and interest rates, the high-tech slowdown, and the end
of preferential export quotas for garments, according to the World Bank's latest East
Asia Update released Thursday.
Avian flu, which is endemic in the poultry flocks of many East
Asian countries, is a growing concern, however, for regional
economies as the disease spreads among birds and as health experts
look for signs of human-to-human transmission.
The latest edition of the World Bank's twice-yearly economic
survey of East Asia and the Pacific shows growth in the region
moderating from 2004's exceptionally strong rate of 7.2 percent.
Japan is showing signs a robust economic recovery, and China's GDP,
which has continued to grow at more than 9 percent this year, is
expected to slow only modestly next year to just under 9
percent.
"Economies in the region have adjusted well to some fairly
serious shocks since the end of 2003, not least of which was the
doubling of global oil prices," said Jamil Kassum, Vice President
of East Asia and Pacific Region. Indonesia, for example, which cut
fuel price subsidies, adopted bold measures to soften the impact on
the poorest through a new cash transfer program and increased
health, education and infrastructure spending.
"These adjustments, including Indonesia's move to cut fuel
subsidies and offset effects on the poorest, may have slightly
lessened the recovery in domestic consumption, but, in the
longer-term, they are putting economies on much more solid
footing," said Homi Kharas, Chief Economist of the East Asia and
Pacific Region. Indonesia's move also shows the increasing
importance for governments to take into account the social impacts
of policy changes, particularly on the poorest members of
society.
China's growth remains higher than expected. "The latest numbers
suggest a pick-up in domestic demand, while trade's contribution to
growth is coming down" Bert Hofman, Lead Economist China said.
"This is good news for China's trade surpluses which are now likely
to come down as a result of these demand developments. At the same
time, China should watch the apparent pick-up in investment, and
the recent rise in liquidity in the banking system, which may yet
spill over in higher credit growth." The China
Quarterly Update released together with the East Asia
Update notes that measures to improve social safety nets,
health and education could support the Government's strive for more
balanced growth, but that in order to maintain growth such measures
to promote consumption need to be flanked by structural reforms in
the financial sector and corporate governance to improve the
efficiency of investment.?The report warns that redistributive
measures should avoid raising the tax burden to levels that could
slow growth. The China Quarterly includes a special focus
on China's health system.?
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Poverty continues to fall in most parts of East Asia with the
number of people living on less than US$2 a day falling by 37
million to just less than 32 percent in 2005, which is down from 50
percent in 1996.
Avian flu
On a more sobering note, the report notes that avian flu is now
endemic in the poultry flocks of many countries in the region and
indeed has spread to Europe and central Asia.?"While the costs
of dealing with this have so far been limited to around 0.1 percent
of GDP, from culling birds and implementation of better animal
health surveillance systems, the potential impact of a serious
pandemic is of grave concern," said Milan Brahmbhatt, a lead
economist and main author of the report.
"Dealing with the influenza threat requires top political
priority in an approach that brings together agriculture, animal
health, human health, and finance, along with the best technical
help from international agencies who are mobilizing to support
country initiatives," Mr. Brahmbhatt added. Country representatives
and international agencies, including The World Health
Organization, the Food and Agriculture Organization, the World
Organisation for Animal Health, and the World Bank, will be meeting
in Geneva November 7 through 9 to strengthen global coordination
and assess national plans, focusing on affected and at-risk
countries.
Trade
Another positive development has been the way in which trade in
garments has evolved, after the phase out of the Agreement on
Textiles and Clothing in January, which offered preferential
treatment for some exporters. Fears were that some of the poorest
exporters in the region would lose out completely as China gained
free access to major markets. But, in fact, poor countries like
Cambodia and Lao PDR have been able to expand their market share of
garment exports. The report, which includes a special focus section
on trade ahead of the December World Trade Organization meeting in
Hong Kong, also notes that East Asian economies have much to gain
from liberalizing their services sector in addition to much-needed
progress on the Doha Development Agenda.
(China.org.cn November 4, 2005)
