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Asia-Pacific posts strong 2004 growth

Shrugging off a stream of disasters and shocks, the Asia-Pacific region last year managed to post its strongest economic gains since 2000, the UN said yesterday in an annual survey.

Matching that performance this year is unlikely as a raft of challenges including a weak dollar and continuing high fuel costs weigh on Asia, according to the UN Economic and Social Commission for Asia and the Pacific (UNESCAP).

Record high oil prices, bird flu and a series of natural disasters culminating in the cataclysmic December tsunami failed to prevent the region's developing countries from posting combined growth of 7.2 percent.

"The region experienced its highest growth rate since 2000," UNESCAP executive secretary Kim Hak-su said at the launch of its annual report on the region, which comprises 60 countries and territories from Turkey to China.

The performance is linked to the strongest global growth in about 30 years and pegged to Asia's impressive export performance, domestic demand, relatively low inflation and rising foreign direct investment (FDI), Kim said.

FDI inflows to the region top-ped US$166 billion last year, up 46 percent over 2003, Kim said.

The growth acceleration was most marked in East Asia and Northeast Asia, particularly in China, which expanded "beyond all expectations" at 9.5 percent last year compared to 9.3 percent in 2003, UNESCAP said.

Asia's top economy Japan's 2.6 percent growth was its best performance in 14 years, nearly doubling from 1.4 percent in 2003, while South Korea hit 4.6 percent after 3.1 percent in 2003.

Southeast Asia had its strongest growth since the 1997 Asian financial crisis, with Singapore leading with 8.4 percent, followed by Malaysia and Vietnam at more than 7.0 percent, Kim said.

UN Secretary General Kofi Annan hailed the "resilience of the region's economies" to a wide spectrum of shocks within a one-year period, starting with the earthquake in Bam, Iran in December 2003, and including bird flu, high oil prices, the spread of HIV, floods, droughts and then the December tsunami.

"However, prospects for 2005 have been undermined in the affected countries by the tsunami and other factors," Annan said in the survey's foreword.

UNESCAP predicted a slowdown in this year's growth for Asia-Pacific to 6.2 percent.

Kim said regional challenges included a weak dollar and rising interest rates, high oil prices, continuing youth unemployment, a rising elderly population in Asia and pressure to pursue "green" or environmentally friendly practices.

"Prospects for the region are bound up with the impact of the Chinese government's [macro-control] measures and whether its economy experiences a `soft' landing," Kim said.

Smaller countries such as Sri Lanka, Bangladesh, Cambodia and Laos, whose economies are heavily dependent on clothing and textile exports, are likely to suffer with the end of a 30-year-old garment-quota system. China, India and Pakistan are likely to benefit, he said.
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