A fifth year of powerful economic growth in East Asia and the Pacific has driven the number of people living in poverty in the region to its lowest level ever, but the World Bank warned yesterday that oil prices could dampen the boom next year.
Led by China's strong performance, growth in East Asia -- excluding Japan -- is projected at 7.1 percent. For developing countries, it will be 7.9 percent, the World Bank said in a report. At the same time, the region's population has jumped by about 4 percent, to around 1.85 billion.
The remarkable growth has brought the number of people living on US$2 or less a day down to 636 million, or about a third of the population -- as compared with nearly 890 million five years ago.
With an average growth of 6 percent a year since 1999, "there could hardly be more striking evidence as to the power of sustained economic growth to reduce poverty," the bank said.
"Even excluding China, the absolute number of poor would be at their lowest level ever, finally overcoming the higher poverty created by the 1997 crisis," said Jemal-ud-din Kassum, regional vice president for East Asia and Pacific.
However, the report warned that recent growth in Asia has peaked and economic activity is shifting -- if it hasn't already -- to lower gear. It said the outlook for next year looks less favorable because of the spike in oil prices, slower growth in rich countries and a slowdown in global demand for information technology products.
"In a word, the environment facing East Asia is more uncertain," it said.
In April, the bank predicted the region would grow 7.3 percent this year and 6.5 percent next year. The latest report cut the bank's forecast for next year to 5.9 percent.
High growth in Asia is led by strong exports, supported by demand from China, the global recovery, a rebound in the global high-tech industry, and strong commodity prices.
Kassum also noted that the expansion was taking place "during a time of major political advances with a sweep of legislative and presidential elections, including Indonesia's first-ever direct election of a president, capping what looks like being a remarkable year for the region."
Efforts by China, which has two-thirds of Asia's poor, to reduce poverty dominated the regional picture, the bank said.
Poverty in China is estimated to have fallen to about 32 percent this year from 34 percent in last year and 70 percent in 1990, driven by significant gains in rural income -- mainly due to increased agricultural output, higher grain prices, the introduction of direct subsidies to farmers and a reduction in agricultural taxes.