Despite the impact of severe acute respiratory syndrome (SARS), Asia's 41 developing economies will still outperform the rest of the world with 5.3 percent growth this year, down from 5.7 percent in 2002, the Asian Development Bank (ADB) said in its annual forecast yesterday.
China will be the strongest performer with estimated growth of 7.3 percent, compared with 8 percent last year, the Manila-based bank said.
Overall, SARS is likely to depress Asia's growth by 0.1 to 0.2 percentage points in 2003, but strong domestic demand, improving export performance and prudent fiscal and monetary policies are expected to carry the region's momentum into 2004, with the ADB projecting higher gross domestic product (GDP) growth of 5.9 percent.
The ADB Asian forecast does not include Japan, Australia or New Zealand.
The bank warned that the economic outlook remains highly vulnerable to the impact of SARS on tourism and business travel as well as weaknesses in industrial countries.
"The region's strong fundamentals are reflected by the high level of reserves and low rates of inflation, leaving it in a good position to weather an uncertain external environment and the SARS outbreak," ADB chief economist Ifzal Ali said in a statement.
Areas noted in the report include:
Hong Kong Special Administrative Region will see a 0.6 percentage point decline in GDP to 2 percent this year.
Economic growth for East Asia as a whole is expected to slow to 5.6 percent in 2003 from 6.5 percent last year.
Southeast Asia recovered more strongly than expected in 2002, growing 4.1 percent.
GDP growth is projected at 4 percent this year, less than previously expected due to the impact of SARS.
Viet Nam will be the strongest performer at 6.9 percent. Singapore, hit hard hit by SARS, will grow 2.3 percent.
Growth in South Asia is expected to climb to 5.7 percent, up from 4.2 percent last year, led by 6 percent for improving India, which accounts for three-quarters of the subregion's economy.
Nepal will bounce back from a 0.6 percent contraction in 2002 to post 1.5 percent growth.
In Central Asia, strong 2002 GDP of 7.7 percent reflected good performances by Azerbaijan, Kazakhstan and Tajikistan.
A moderate deceleration in growth to 5.8 percent is expected for 2003 and 2004 as oil and gas production slows.
After two years of decline, the Pacific saw a subdued recovery in 2002 with 0.9 percent growth.
The modest rebound is expected to continue, with growth of 2.4 percent in 2003 as social and political stability improves, supported by rising tourism, an anticipated improvement in commodity prices and an improved business climate.
The ADB also said Afghanistan's economy is likely to surge in 2003 and 2004, provided that security improves and international support for reconstruction continues. The outlook does not include a growth figure because economic statistics for the country are virtually nonexistent, so it noted that growth in 2003-04 could be well above 10 percent with inflation kept in reasonable check.
Indonesia's economy is expected to show modest growth of 3.4 percent in 2003 and 4 percent in 2004, the ADB said.
Cambodia, Sri Lanka and Mongolia are expected to expand by 5 percent in 2003, Nepal 1.5 percent, Pakistan 4.5 percent and Bangladesh 5.2 percent.
The Philippines is forecast to grow 4 percent this year and 4.5 percent in 2004.
Of particular concern is the fiscal deficit that rose sharply to 5.4 percent of GDP in 2002, due to a shortfall in tax collections, the bank said.
The total trade of Asia's developing economies with the rest of the world increased rapidly last year, with exports rising 31.3 percent to US$66.4 billion in September from US$50.6 billion in January.
Imports also increased slightly by US$1.4 billion, or 3 percent, from US$46 billion in September.
(China Daily April 29, 2003)