A "terror-premium" on oil prices and rising interest rates appear set to brake Asia Pacific economies after a roaring performance this year, the Asia-Pacific Economic Cooperation (APEC) forum said in a forecast.
In a report to APEC trade ministers attending annual talks ahead of a summit this weekend, the forum's economic panel said growth would slow down to 3.5 to 4.0 percent next year after hitting a four-year record high of 4.5 to 5.0 percent this year.
According to forecasts by most economic institutions, APEC economies will continue to grow actively this year and next year.
"They will grow about 4.5 to 5.0 percent and 3.5 to 4.0 percent in 2004 and 2005, respectively," according to the report, a copy of which was made available by a senior official attending the ministerial talks.
There are a number of "headwinds" that could slow down growth next year, warned Choong Yong Ahn, the chairman of APEC's economic committee, in the report "APEC Economic Outlook."
"The first is the higher oil prices caused by strong demand [mainly from the US and China], and this reflects the `terror premium' on oil prices resulting from geo-political factors in the Middle East," he said.
"Another is the increasing possibility of rising interest rates initiated by the monetary authorities in the context of a cyclical peak of economic growth and soaring energy costs," Choong said.
In this context, the outlook emphasized the importance of maintaining APEC members' structural reforms to improve efficiency in order to sustain economic growth in the medium-term.
APEC economies range from developed states like the US, Japan, Canada, New Zealand and Australia to rapidly growing states such as China and Southeast Asian nations.
Except for Indonesia, Malaysia, Brunei and Mexico, APEC economies are net oil importers, officials said.
Oil prices have fallen sharply in recent weeks as a rise in US crude oil inventories assuaged market worries about tight supplies.
But the threat of a cold winter in the US put an end to a slide in prices on the New York market Wednesday.
The price of a barrel of light sweet crude for delivery next month rose US$0.73 to US$46.84, having fallen as low as US$45.40 in early trading, while in London Brent North Sea crude for delivery in January rose US$0.47 to US$42.76.
The APEC report said the world economy also appeared to be losing some of its growth momentum, adding that higher oil prices raised some doubts about the sustainability of global economic growth over the medium-term.
The APEC report forecast that after this year, the world economy was expected "to experience a slight slowdown in economic growth but still maintain a GDP growth of over 4 percent."