Asia will remain the world's fastest-growing area this year despite the adverse effects of SARS and the war in Iraq, with growth likely to accelerate next year as global demand recovers, the Asian Development Bank said yesterday.
Asia, excluding Japan, will grow 5.3 percent this year, the ADB said, sticking to its April forecast despite the SARS epidemic then hitting the region.
That's a slowdown from the region's 5.6 percent growth last year, but the bank expects growth to pick up to 6.1 percent next year, better than its April forecast of 5.9 percent.
This year's relatively strong outlook "is all the more remarkable" given the weak first half of this year in major industrial countries, including the US and euro zone nations, the ADB said in the semiannual update of its Asian Development Outlook.
The Manila-based lender raised its forecasts for China and Hong Kong -- epicenters of the flu-like virus -- as well its forecasts for Thailand and Central Asia.
But the ADB cut its outlooks for Singapore, also battered by SARS, and South Korea, which has had to contend with the fallout of a consumer-credit crunch, nationwide strikes and a devastating typhoon.
SARS cut regional demand and business revenue nearly US$60 billion, while governments spent a staggering US$18 billion -- US$2 million per person infected -- containing the outbreak, the ADB said.
The biggest loss was in tourism and retail.
"Fortunately, most governments involved saw the need for determined action to bring SARS under control fast -- and they were largely successful," the bank said.
The theme of the first half of this year was the continued, rapidly increasing importance of China as a driver of regional trade and growth and the substantial accumulation of foreign-exchange reserves by various countries, the ADB said.
"If these trends continue and regional economies continue to focus on policies to achieve faster growth in domestic demand, Asia's economic outlook should become less dependent on economic developments in the major industrial countries," the ADB said.
Despite SARS, China's strong foreign investment inflows and soaring exports will help the economy grow 7.8 percent this year, slightly down from last year's 8 percent, the ADB said. It raised China's outlook for next year to 7.9 percent from 7.6 percent.
Similarly, despite falling into a recession in the first half, Hong Kong's economy will likely expand 2.1 percent this year, the ADB said, shading up its earlier forecast of 2 percent growth and predicting the city's economy will accelerate to 4.8 percent next year, an upgrade from April's forecast of 4 percent growth.
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