Asian economies will be able to weather 2008 uncertainties, UN predicts

The Asia-Pacific region is likely to continue to see strong economic growth this year, despite uncertainties posed by a slowing United States economy, according to a new United Nations report.

“Key Economic Developments and Prospects in the Asia-Pacific Region 2008” – published by the UN Economic and Social Commission for Asia and the Pacific (ESCAP) – states that the region’s resilience will be underpinned by strong growth in China and India and high commodity prices.

“Asia Pacific economies are well prepared to manage continued uncertainty in the external environment over the coming months,” Chief ESCAP economist Ravi Ratnayake said today at the launch of the report in Bangkok.

“The region’s main strength lies in healthy macroeconomic fundamentals – countries have the room to adopt supportive fiscal and monetary policies if faced with significantly declining export growth, financial market volatility or inflationary pressures,” he added.

Developing economies in Asia posted an economic growth rate of 8.2 per cent in 2007 and is expected to grow at a “slightly lower but still robust” rate of 7.8 per cent this year.

Despite the upbeat forecast, the report warns that an unravelling of the United States sub-prime mortgage problem and a slowing of the US economy could pose risks for Asian economies. “There is a need to tread carefully given the signs of financial market volatility over the year ahead,” the study cautions.

Japan is forecast to grow at a lower rate in 2008, with its export sector and export-related investments suffering from a slowing US. China too faces a small decrease in growth in 2008, owing to a slowdown in export markets and the “continued efforts by the Government to cool the economy.”

At the same time, the report predicts India will continue to witness dynamic growth in 2008, driven by investment in the manufacturing and service sectors, and will be “largely insulated from weakness in the global economy.”

The report also calls on governments to address environmental problems to sustain long-term growth, citing the example of China, with 2007 figures published showing that air pollution, particularly in big cities, is leading to higher rates of lung disease including cancer and respiratory problems.