Iraq, SARS cloud UN forecast of Asia-Pacific region's economic growth
According to Ambassador Murari Raj Sharma of Nepal, who launched the report at UN Headquarters in New York, the survey, especially forecasts for 2003, was based on data for the first three quarters of 2002. By early March of this year, neither the war in Iraq nor the outbreak of Severe Acute Respiratory Syndrome (SARS) had occurred.
"The impact of these events on the forecast made in the survey is still a subject of considerable debate and uncertainty," he told a press briefing on the launch of the "Economic and Social Survey of Asia and the Pacific 2003," which was compiled by the UN Economic and Social Commission for Asia and the Pacific (ESCAP). The report highlights the performance of regional economies in the past year, provides a brief trend analysis and some projections for 2003.
The report states that despite the weakening of the global economy, the region performed surprisingly well in 2002 - 2 per cent higher than the previous year - largely due to surging intra-regional trade, fiscal stimulus and low interest rates.
While the survey had projected the 5 per cent growth to continue prior to the new domestic and global developments, it is now unclear how the economy will fare this year as it is tied to the intensity and duration of military action in Iraq and its ripple effects, particularly on energy prices. Asia-Pacific imports 40 per cent of its energy.
Compounding matters further is the recent outbreak of SARS. In addition to the health challenges it is posing in the region, the illness is undermining the tourism and travel industry. Ambassador Sharma said there were fears that a prolonged outbreak could extend the damage beyond those two industries.
How well Asia-Pacific withstands these stormy conditions also hinges heavily on how the economies of developed countries perform, especially the United States, Japan and the European Union, which together import half of the regions export products, Ambassador Sharma said. He also stressed that there was "no consensus on how the regional economy might be affected."