Economies in the Asia-Pacific region are projected to grow at a slower pace this year, with the SARS scourge a main culprit for the weaker outcome, a regional economic think tank said in a report yesterday.
For the year, the region's average growth is seen at 2.8 percent after expanding 3.1 percent last year according to the Pacific Economic Cooperation Council.
"The main cause of the dip this year is SARS, which has cut the expected weighted average rate of growth by about one-tenth," the council, a non-governmental organization that is the only private body within the 21-member Asia-Pacific Economic Cooperation forum, said in a recent report.
Now that the SARS crisis has receded, the region's growth prospects this year could be further threatened by the US economy and disputes in the global trading system.
"Beyond lingering effects of SARS we see risks in the forecasts in uncertain financial market responses to the US current account deficit, and in growing fractures in the international trading system that are increasing the costs of international trade and investment," the council said.
SARS will impede China in the short term, slowing the region's new economic powerhouse to 7.8 percent this year from 8 percent last year, but next year the Chinese economy will expand 8.3 percent, the council said in the report.
"The forecasts here take into account the likely effect of SARS, which has hit both foreign trade and the service sector in most areas," the council said.
A pressing task facing the Chinese government is to meet its "tough target" of creating 9.5 million jobs this year to keep the urban registered unemployment rate below 4.5 percent, the report warned.
Japan, the region's biggest economy, is "running along a narrow path of non-negative, near zero growth" despite averting a recession last year, the report said.
"This year, the weak US economic outlook poses a negative risk [for Japan]. Personal consumption expenditure will remain stagnant and business fixed investment will not recover in this year," it said.
South Korea, which has rebounded strongly from the 1997 through 1998 Asia financial crisis, is now in the downward phase of its business cycle with this year's growth projected at 3.5 percent, according to the council.
Thailand, which was also among the hardest hit during the regional financial crisis, will likely expand 5 percent this year after 5.2 percent last year.
While the Thai government has made strong strides with its macroeconomic policies since the 1997 through 1998 crisis, long term issues such as restructuring and strengthening the financial system have yet to be tackled, the council said.