Asia-Pacific's 2008 Economic Growth Likely Constrained by US Subprime Crisis, Think Tank Says.
Asia's economic growth is likely to be constrained by an expected slowdown in the U.S. economy and potential spillover from the subprime mortgage crisis, two economic forecasts released Thursday said.
Emerging East Asian economies, which includes China, will likely grow a collective 8 percent next year, down from the 8.5 percent rate forecast for this year, the Asian Development Bank said in a twice-yearly report. "If the U.S. economy enters a recession and the global economy substantially slows in tandem, the impact on emerging East Asian economies will be potent," the report said.
The U.S. economy -- a major export market for Asia -- has been buffeted by a slowdown in its housing market and a credit crisis after a spike in defaults on mortgages to borrowers with poor credit histories, which has led to losses at major banks and global market turmoil.
Even if the U.S. economy avoids a recession, the ADB predicted financial markets will remain volatile for some time. Other risks include further tightening of global credit, abrupt changes in exchange rates and a continued rise in oil and commodity prices, the Manila-based bank said.
Similarly, the Pacific Economic Cooperation Council said in a separate report that because of possible fallout from the subprime crisis, the outlook for the broader Pacific Rim region is the most uncertain it has been since the 1997-98 Asian financial crisis. Still, Singapore-based PECC predicted that the U.S. economy would not enter a recession and that the troubled American housing market will recover by the second-half of 2008.
The think tank, which comprises business executives, government officials and academics from more than 20 economies stretching across the Pacific from Australia and China to Chile and Canada, was "cautiously optimistic" about the region's outlook. It projected member economies' collective growth to remain at 4.9 percent next year, about the same as this year. "The risks come principally from the United States," said Woo Yuen Pau, the report's coordinator.
While the U.S. economy barreled ahead at a 4.9 percent rate in the third quarter, many economists expect it to slow to a barely discernible 1.5 percent or even less in the current quarter. Strong demand from within Asia, particularly China, may be able offset some drag from a likely U.S. slowdown, the report said.
"We think we will be able to dodge the bullet, and that is in part due to very robust domestic demand in Asia, principally from China where import growth is still very strong and domestic demand growth is also very robust," Woo said.
The PECC also cited high energy prices, water pollution and global warming as the top three risks to economic growth in the region. China's booming growth will slow slightly to 10.5 percent next year from an estimated 11.4 percent this year if government measures to cool the economy begin to take hold, the ADB forecast said.
Economic expansion in the 10-member Association of Southeast Asian Nations will likely slightly moderate to 6.1 percent in 2008, from 6.3 percent this year, the bank said. But even as growth slows a bit in emerging East Asia, inflation is rearing its head in many economies, it said.
"Slower growth but rising inflationary pressures despite appreciating currencies pose major challenges for the region's policy makers," said Jong-Wha Lee, head of ADB's Office of Regional Economic Integration.
Greater flexibility in exchange rates, a better investment climate and management of capital inflows will help the region support growth, the report said. Emerging East Asian economies include China, South Korea, Hong Kong, Taiwan plus the 10 ASEAN countries -- Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.
Asia's economic growth is likely to be constrained by an expected slowdown in the U.S. economy and potential spillover from the subprime mortgage crisis, two economic forecasts released Thursday said.
Emerging East Asian economies, which includes China, will likely grow a collective 8 percent next year, down from the 8.5 percent rate forecast for this year, the Asian Development Bank said in a twice-yearly report. "If the U.S. economy enters a recession and the global economy substantially slows in tandem, the impact on emerging East Asian economies will be potent," the report said.
The U.S. economy -- a major export market for Asia -- has been buffeted by a slowdown in its housing market and a credit crisis after a spike in defaults on mortgages to borrowers with poor credit histories, which has led to losses at major banks and global market turmoil.
Even if the U.S. economy avoids a recession, the ADB predicted financial markets will remain volatile for some time. Other risks include further tightening of global credit, abrupt changes in exchange rates and a continued rise in oil and commodity prices, the Manila-based bank said.
Similarly, the Pacific Economic Cooperation Council said in a separate report that because of possible fallout from the subprime crisis, the outlook for the broader Pacific Rim region is the most uncertain it has been since the 1997-98 Asian financial crisis. Still, Singapore-based PECC predicted that the U.S. economy would not enter a recession and that the troubled American housing market will recover by the second-half of 2008.
The think tank, which comprises business executives, government officials and academics from more than 20 economies stretching across the Pacific from Australia and China to Chile and Canada, was "cautiously optimistic" about the region's outlook. It projected member economies' collective growth to remain at 4.9 percent next year, about the same as this year. "The risks come principally from the United States," said Woo Yuen Pau, the report's coordinator.
While the U.S. economy barreled ahead at a 4.9 percent rate in the third quarter, many economists expect it to slow to a barely discernible 1.5 percent or even less in the current quarter. Strong demand from within Asia, particularly China, may be able offset some drag from a likely U.S. slowdown, the report said.
"We think we will be able to dodge the bullet, and that is in part due to very robust domestic demand in Asia, principally from China where import growth is still very strong and domestic demand growth is also very robust," Woo said.
The PECC also cited high energy prices, water pollution and global warming as the top three risks to economic growth in the region. China's booming growth will slow slightly to 10.5 percent next year from an estimated 11.4 percent this year if government measures to cool the economy begin to take hold, the ADB forecast said.
Economic expansion in the 10-member Association of Southeast Asian Nations will likely slightly moderate to 6.1 percent in 2008, from 6.3 percent this year, the bank said. But even as growth slows a bit in emerging East Asia, inflation is rearing its head in many economies, it said.
"Slower growth but rising inflationary pressures despite appreciating currencies pose major challenges for the region's policy makers," said Jong-Wha Lee, head of ADB's Office of Regional Economic Integration.
Greater flexibility in exchange rates, a better investment climate and management of capital inflows will help the region support growth, the report said. Emerging East Asian economies include China, South Korea, Hong Kong, Taiwan plus the 10 ASEAN countries -- Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.
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